Prioritize Your Insurance Coverage 

You Can't Afford to Be Unprotected
by Minya K. Irby | Living Well | Wednesday, July 3, 2013 

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The expression “insurance poor” is a popular phrase. It means that you are paying more in insurance premiums than you can afford to pay. Your insurance premiums should fit comfortably within your budget. Having insurance should be considered just as important as paying your utility bills. But if you want to avoid overextending your finances to buy insurance, you should first consider your needs. Insurance provides us with peace of mind. It means that when trouble comes, my problem will become someone else’s problem and I can rest assured that regardless of my peril, my quality of life will be restored. This is what owning insurance does for us. 

When it comes to insurance coverage, no one can afford to be unprotected, yet there’s a formula you should adhere to if you’re faced with conflicting priorities about purchasing insurance —simply remember this, “people over income, and income over things.”  

First, Protect the People You Love 

When purchasing insurance the very first insurance you want to own is life insurance. It’s protection for your life.  You should have life insurance on yourself, your spouse, and your children. You also want to have two policies—a term policy and a permanent policy. The term policy is relatively cheap and you are able to buy a lot of coverage. On the other hand, the permanent policy has a few more guarantees than a term policy, because it builds cash value over time and is designed to build wealth. The permanent policy is more costly than the term policy because of the guarantees and equity, so purchasing it in large amounts is not only unnecessary, but extremely expensive. When purchasing these policies be sure to buy both at the same time and preferably in your mid-late twenties through early forties to keep premium costs low.  

Next, you want to own healthcare insurance. Whether it is provided by your employer; or you decide to purchase individual coverage, having healthcare coverage is not only essential but is now required by law. According to a Gallup Poll just reported last week: 43% of uninsured Americans are unaware of the fact that they are required to have healthcare coverage or pay a fine due to the 2010 Affordable Care Act’s mandate. But if you’re generally concerned about costs, the best way to control costs with health insurance is to be healthy. Understand what your copay, deductible, coinsurance, and total out-of-pocket expenses are. You should also select a voluntary product to help fill in the gap starting with a hospital and accident plan. The additional coverage, like cancer and/or critical illness, should be purchased as an extra hedge of protection when you know your family health history and daily exposure. Proper diet and exercise, healthy weight maintenance, regular doctor visits for preventive care, not smoking; these habits almost always guarantee lower premiums and lower total out-of-pocket expenses.  

Next, Protect Your Income  

Income is simple. Protect your paycheck, your ability to earn a living, after all this is why we go to work, to maintain a quality standard of living. Contrary to what some of us may think, the greatest asset that you have is not your house. It is your ability to earn a living. You want to protect your income, and owning disability insurance is how you protect this most valuable asset. Don’t fall into the “all I can get” greed trap. Disability insurance can be rather expensive, so when purchasing it ask yourself the following: what is the minimum amount of money I need to sustain my household until I can get back to work after a sickness or an accident? And, how long can I afford to be out of work?  

Finally, Protect Your Things

Protect the replaceable things in your life. Auto insurance and homeowners insurance are mandatory if you own a car or a house with a lease holder. Renters insurance is not necessarily mandatory, but owning it is equally as important as homeowners insurance. While the landlord has insurance on your dwelling place, their coverage does not extend to your personal belongings. Even if your home catches on fire due to mechanical problems, without renters insurance, you’re faced with the financial costs of replacing all of the things you have worked so hard to acquire over the years.  

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