Day 22 Of 30 Days Of Stay-At-Home Personal Finance Wins: Review Your Insurance Policies

4 minute read

What if you were able to come out of this time of social distancing and economic crisis with a stronger and healthier financial life? What if you looked at this as an opportunity to take a little bit of your extra time each day to work on your finances?

Since it takes me about 35 minutes to drive to work in the morning and 45 minutes on the way back home, I have an extra 1 hour and 20 minutes of my day that I don’t have to drive while I’m working from home that I can use to accomplish something. This doesn’t even take into consideration all of the networking and social events that would usually take up some of my time throughout the week.

Obviously, your situation is different than mine (and probably a whole lot different if you have kids at home who would otherwise be in daycare), but I’m guessing that we all have at least a little extra time right now that we can dedicate to our personal finances.

It looks like we’re going to continue to practice our social distancing skills at least through April, and now is a great time to work on creating a better financial situation, so I’m giving you 30 days of stay-at-home personal finance wins throughout April.

Unfortunately, I understand that there are many who have (and who will) lose their jobs during this time of uncertainty and objectively will not come out on the other side of this with a stronger financial situation. Hopefully, many of these personal finance wins can help to lessen the blow and make things easier on them. On the other hand, I think that many of these wins are still relevant to those who are fortunate enough to be in a position to not have to worry about their job and their finances to help them build a healthier financial life.

Day 22: Review Your Insurance Policies

Just reading the name of today’s win probably is painful to many. There are so many different types of insurance including life, disability, long-term care, health, dental, vision, homeowners, auto, umbrella… Should I keep going?

Having all of these different types of insurance policies means that we’re shelling out quite a bit of money each year to make sure that we’re protected against financial disaster. Unfortunately, insurance is something that most of us need to help protect us from catastrophes. It’s one of the pillars of a strong financial foundation.

So, if insurance is necessary and we have to pay a bunch of premiums to have all of our policies in place we should be reviewing them regularly, right?

Right.

Most people buy insurance and then forget about it. We know we need it in place so as long as we’re paying for it we’re good to go, right? That’s not the case. It’s important to complete regular reviews of your insurance policies to not only see if you’re paying too much for them in premiums, but more importantly to evaluate if you have the proper insurance terms and riders and coverage in place. An insurance policy that you bought five years ago, or even one year ago, may not be appropriate for your life today and into the future.

Most people have never done a thorough review of their insurance policies and probably don’t even know how to go about doing so. There are a lot of things to think about and a lot of confusing jargon that can be overwhelming. Do I have the proper terms in my policies in place? Do I need to increase my coverage? Do I have the proper riders? Are there things that I’m paying for that I don’t need? Do you know if you’re paying too much for premiums or if you could get better coverage for the same premiums?

There are a lot of questions to be answered. This is where using a professional can be helpful.

Many aren’t going to know what to look for when going through this exercise. You can ask an independent insurance broker to audit your policies and provide their recommendations and quoted premiums. If you want to be extra diligent then you can go through the process with multiple insurance brokers and compare the recommendations and quotes that they give you.

If there are differences between the quotes that you receive, then you should ask about them and also ask about the differences between the quoted policies and the current policies that you have in place. Be curious and learn more about how the insurance is really helping your finances. If the person is trying to help you and truly working for you, then they’ll have no problem with you going through this process, educating yourself, and strengthening your financial life.

You can even review the insurance coverages that you have through your employee benefits and see if they’re appropriate for you or if there are better choices that you can make. Many employee benefits websites maintain the options that you had last year so you can review what they were and see if there are better choices that you can make once open enrollment begins rather than just choosing the same benefits that you have now. If you need help with evaluating your benefits, then you can consult a fee-only financial planner who can help you.