by Robin Layton
Many attractive things vie for our spending dollars: vehicles, vacations, clothes, furnishings, new technology. It’s easy to forget the need for good insurance coverage – until something drastic happens.
Our insurance needs change as we age and it’s best to work with an expert to determine what you need. Working, single adults who rent have different needs than a married couple who owns their home, has a few children and is looking at retirement in a decade.
If you are married, you should consider life insurance to protect your spouse, children and the home you’ve invested in. Consider it a replacement of your salary should you pass away.
Life insurance is either whole (also called universal) or term. With whole life insurance, your survivors get the death benefit, but also the policy’s cash value, with a guaranteed rate of investment return on a portion of the money that you pay. Term insurance pays a death benefit during a specified term.
Have you retired, sold your home and are now renting in a retirement village? This means your children are most likely self-supporting and you may possess sufficient financial assets at this point. Maybe you’ve outgrown your need for life insurance, especially if you’ve made pre-paid funeral arrangements. Go over your financial records with an insurance professional to determine where you can save money.
At this stage, you should be carrying some type of long-term care policy.
Such policies may cover:
- Nursing home: Usually offers skilled health and personal care 24/7.
- Assisted living: Housing and limited care designed for senior citizens who need some assistance with daily activities, but do not require a nursing home.
- Adult day care services: Services outside the home that provide health, social and other support services in a supervised setting for adults.
- Care at home: Someone who comes into the home to help with personal services such as bathing, grooming. Housework may also be included.
- Service coordination: Services provided by a licensed professional who assists with determining needs, finding services and arranging for care.
None of us like to waste our money, so it’s worth your time to find an insurance professional you trust and discuss at each life stage what you need to have insured, or not.
AFTER THE WILDFIRE
It’s easy to breathe a sigh of relief after the wildfire that was raging so close to your home is extinguished. Unfortunately, the threat to your largest investment isn’t over. As explained by the Arizona Department of Insurance, “Wildfire alters the landscape in ways that increase water and mud runoff in burned areas. Under normal circumstances, the forest floor drains, dissipates and absorbs water effectively enough to reduce flooding downstream. Burned forest areas are more unstable and less able to hold water, collecting downstream with increased velocity and often resulting in urban and flash flooding.”
Most homeowners’ insurance policies do not cover flood damage, but most agents who sell homeowners’ insurance also can sell federal flood insurance policies. Detailed information about the National Flood Insurance Program (NFIP) is available at FloodSmart.gov.
Don’t wait until the storms hit after the fires, because it takes 30 days for an NFIP policy to go into effect after it’s purchased. Plan ahead.
PREPARE NOW FOR A STORM EMERGENCY
With wildfire and monsoon seasons upon us, review your insurance policies. Make sure you know what is and is not covered. If you have questions, contact your insurance agent or insurer.
Store electronic copies of your insurance policies with your home inventory and keep paper files in a safety deposit box. Make sure to have a copy of your policy declarations page listing all of your coverages, as well as your insurance cards.
Collect the 24-hour contact information for your insurance agent and insurer and enter it as a contact on your smartphone. Make a list that includes your policy numbers, insurer and insurance agent’s phone numbers, website addresses and mailing addresses. Also, check to see if the company or agent has an emergency information hotline. It is a good idea to store this information — and your home inventory — in a waterproof, fireproof box or safe. If you evacuate your home, take this information with you.
Protect Yourself from Fraud
Home repair fraud is common after a major weather event. Get more than one bid from contractors and request at least three references. Ask for proof of necessary licenses, building permits, insurance and bonding. Record the contractor’s license plate number and driver’s license number, and then check for any complaints with the Better Business Bureau. Finally, be wary of contractors who demand up-front payment for repairs. Ask for references and verify contractors are legitimate.
Sources: FEMA, Arizona Department of Insurance and Floodsmart.gov
INSURANCE TERMS TO KNOW
What is “replacement cost”?
Replacement cost is the amount necessary to replace or rebuild your home or repair damages with materials of similar kind and quality without deducting for depreciation.
What is “depreciation”?
Depreciation is the decrease in the home’s value since the time it was built because of age or wear and tear.
What is “actual cash value”?
Actual cash value usually means the sum of money required at the time of the loss to repair or replace the property destroyed, less an amount for depreciation. Actual cash value equals the replacement cost less depreciation. Most standard home insurance policies cover the contents of your home (i.e., personal belongings) on an actual cash value basis, but it is possible to purchase replacement cost.
What is a “peril”?
A peril is a condition that can cause a loss. Three examples are fire, windstorm and theft.
Source: Arizona Department of Insurance
