Step 8: Insuring Your Well-Being
I always say, "People first, then money, then things." That's how you should tackle your insurance. There are three broad types of insurance: life, health, and protection for possessions. Find out what you need as a baseline:
If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance. Keep it simple and buy term life insurance; it's good only for a specific number of years and then expires. That's okay—life insurance wasn't meant to be permanent; it's there to protect your family before you've had a chance to accumulate enough funds (through investments and savings) to do so. Most people should get a 20-year level term policy that has a value equal to 20 times the amount of annual income your family needs to live securely. For example, if your loved ones need $40,000 a year, then you should purchase $800,000 of term life insurance on the person—or persons—whose absence will affect those left behind. It's not that expensive: A 20-year $800,000 term policy for healthy, nonsmoking men and women who are about 35 years old is around $45 a month. Check out www.selectquote.com to shop for term policies.
Those who have been laid off or are worried about losing their job and health insurance coverage should shop around. Ehealthinsurance.com offers the largest individual and small-business health plan selection across more states than any other online or offline source. While many employers must extend health insurance coverage to all laid-off employees for 18 months—thanks to a federal law known as COBRA—you must pay 100 percent of the policy premium. Chances are good you can get a less expensive policy by doing your own shopping.
Policies that Protect Possessions
Whether for your house or your car, buy a policy with the highest possible deductible to get a more affordable premium (the annual cost of the policy). Deductibles are what you pay first, before your insurer kicks in any money when you make a claim. These days, insurers will jack up your premium or deny future coverage if you make a lot of claims. So go with a high-deductible policy that you intend to use only for catastrophes. You can shop for homeowner's insurance at www.insweb.com. And for renters: Your landlord's insurance protects only the physical structure of the home. You need to purchase renter's insurance to protect your possessions. Renters-insurance-quotes-online.com has good information and free quotes on policy prices.
From the August 2003 issue of O, The Oprah Magazine
We Hear You!