Review Insurance Coverage Regularly

Just as you get a physical or bring your car in for regular maintenance, it’s important to conduct check-ups on your insurance coverage. Many Americans are underinsured in several critical areas, and many others are paying for coverage they don't need. An insurance review every one to three years is essential for ensuring you have appropriate coverage.

Consider these key areas as you assess your insurance coverage:

  • Life insurance. Your life insurance needs depend on what life stage you are in. Life changes such as a marriage, birth, divorce or death in the family can affect the coverage amounts you need and who you designate as your beneficiaries.

  • Disability. Since short- or long-term disability insurance is essentially income replacement in the event you become disabled, it’s important to adjust your coverage as your income changes. The rates depend on your occupation, income and health. Employers usually offer this as a benefit, but the coverage may not be sufficient for your needs.

  • Long-term care. Make sure your policy is in line with the rising costs of a nursing home or home health care. In 2007, the average cost for a year’s stay in a nursing home was $77,745, according to a MetLife survey. Keep inflation in mind as well.

  • Homeowners insurance. If your home is completely destroyed, you want to be able to rebuild it to its original condition. Make sure you have enough insurance to replace your home, which may cost more than its value on the open market. Update your policy to include significant home improvements.

  • Coverage for valuables. Protect the contents of your home by taking time to inventory your possessions. Endorsements or riders will cover high-value items such as guns, jewelry or antiques.

  • Auto insurance. Review your current coverage for appropriateness and excess coverage. For example, your health insurance may eliminate the need for medical-payments insurance. Make sure the drivers and vehicles covered under the policy are up to date. Minimum coverage often isn’t enough to cover your assets. A good guideline is to get at least $250,000 in liability coverage. If your vehicle has more than 125,000 miles or if you have enough money saved to purchase another vehicle, it might make sense to drop collision or comprehensive coverage.

  • Health insurance. Most people have a choice of health insurance through their employer. Review your coverage to see if your premium, deductible and co-pays fit your family’s coverage needs. You can compare plans and switch during your open enrollment period. If you’re self employed, contact your insurance advisor to see what plans are available. Ask yourself the following questions when selecting or switching a plan:
    • Do I want to pick up the cost every time I visit the doctor’s office?
    • Do I just need a safety net in the event something catastrophic happens?
    • What do I usually pay for health care in a year?
    • Do I have chronic problems that require regular care and prescriptions?
    • How much are the premiums, deductibles and co-pays?

One caution: If you switch policies, don't cancel your existing policy until your new one is in place. Otherwise, you risk leaving yourself unprotected.

Finally, it may sound obvious, but be sure to store your policies in a safe, easily accessible place so you can refer to them when you need them.