Insurance Policy Breakdown
A reader recently asked about what insurance policies I have. Here is a breakdown:
1) Car Insurance
I only have liability and uninsured motorist coverage (required by law) on my car insurance. My current premium is $187 for 6 months. My car is 8 years old and a few years ago I decided to self-insure and drop the collision/comprehensive coverage. I did just that will the recent minor car accident I had. Yearly Cost $375.
2) Homeowners Insurance w/ General Liability Policy
I have a homeowners policy with an additional $1M general liability policy (acquired when I starting renting my first house out). My current deductible is $1,000, but when I have time I plan on bumping up the deductible to a higher level. Yearly Cost $484.
3) Dwelling Policy for the Rental Property
I have a dwelling policy for my rental that is basically fire insurance for the house. It is required by the mortgage lender. Yearly Cost: $371.
4) Group Life Insurance (work benefit)
Since I have no dependants I feel there is little need for life insurance. My current net worth should provide enough for final expenses, current liabilities, etc. Once I get married I will re-evaluate this area. However, my employer offers a 2x salary life insurance policy that is no cost (other than taxes on GLI costs in excess of $50k). Yearly Cost: Taxes on $124.
5) Disability Insurance
This insurance is the most important for me. I recognize that my biggest concern/risk is becoming disabled. My employer offers a 50% wage replacement long term disability policy for no cost to its employees. They also offer employees the ability to buy your disability coverage up to 66 2/3% wage replacement which I have done. I would have more if I could find it at a reasonable rate; so far I just self-insure by trying to build my net worth as quickly as possible. Yearly Cost:$18.44.
Comments (5)
I honestly never considered getting disability insurance. I know. Bad. But I'm just learning. I assumed my company offered it but of course I was wrong. I'm going to look into it. Another task on my growing to-do-list.
Posted by BTC | December 11, 2006 7:07 PM
wow, you car insurance is so low! i thought I had a good deal of $800/year here in NJ for being 22 years old.
Posted by bryan | December 11, 2006 10:18 PM
This may be the wrong place to say this: Insurance policies, especially real estate, need to be reviewed once a year.
And, an important point - you do not increase your coverage limits just because values have increased. You increase them based on rising construction costs (replacement value according to local codes) which can be provided by the agent. Also, GRC (guaranteed replacement cost) features on homeowner policies have been going away. Assume nothing with these crooks.
Posted by Larry Nusbaum | December 12, 2006 11:29 PM
You mentioned that you will try to increase your disability above 66.67% of your salary. I believe that disability (for most occupations) is capped by law at 66.67%; at least this was the case for my and my wife; we're a CPA and pharmacist, respectively. This may not hold true for all states and occupations, however.
Posted by CPA1298 | December 13, 2006 6:37 PM
Great post! This reminds me that all of the different insurance products we enjoy is practically unheard of in most of the developping world. I need a good insurance stock or two in my portfolio to take advantage of this growth.
Posted by Dexter | December 13, 2006 10:19 PM