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The Right Amount of Insurance


Insurance is designed to reduce risks when certain things happen. Health insurance covers most medical costs if you get sick, for example, and homeowners insurance pays for the majority of repairs in case of a fire. The level of risk you are willing to assume changes over time. Here are some changes you might want to consider:

  • Has the value of your house or contents increased? Review your home insurance coverage.
  • Have you added a driver to your auto policy, especially a teenage driver? Review your automobile insurance coverage.
  • Have you added dependents to your household? Look at your life insurance coverage.
  • Have you acquired items of significant value? Consider high value item coverage or an amendment to your home insurance.
  • Has your health or the health of a family member changed? Review your health insurance coverage.

Having your first child may reduce the financial risk you are willing to pass on to your family if something happens to you. Alternatively, having a healthy and growing savings account may allow you to save money by considering higher deductibles for some insurance coverage. As with all other financial issues, you should review your insurance coverage on a regular basis.

Here is a quick 3 step process for such a review:

  1. Identify all of the insurance you currently have. Gather documents, and define the premium, deductible, and total coverage on each type of insurance you carry.
  2. Make sure you can cover each deductible, and keep in mind that you may need to cover more than one deductible at a time. Also be sure that the total coverage meets your needs.
  3. Consult with your insurance agent if you need to make changes in your coverage or terms.


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