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Elmwood Wealth Management

Insurance is a necessary component to all our lives. It is important, however, to review your policies every couple of years to make sure that they are updated to reflect your own life changes. Here is a quick summary of things to consider.

Home Insurance

Has the value of your house changed? A broad measure to calculate how much coverage you need is to multiply the square feet of your home by the replacement cost to build it again ($300-$400 per sq ft)

Do you have a provision that will pay for your rent somewhere else during reconstruction?

If you have an older home, does your policy allow for increased spending for upgrades in building codes?

Take an inventory of your personal possessions. An easy way to do this is to take pictures of everything then store them in an offsite online backup system.

If you have a burglar alarm, and/or a smoke detector linked to your alarm service, you can qualify for a discount.

Earthquake Insurance

Earthquake insurance coverage level is linked to your home insurance. That means if you have $1,000,000 of rebuilding coverage on your home, the same amount will apply on this policy.

This insurance has a very high deductible, typically 15%. That means if you home is insured for $1,000,000 this policy will only kick into effect after $150,000 of damage.

Update: September 12, 2014

Life Insurance

Term is typically appropriate if you are comfortable that after the term ends you will be in a comfortable financial position. Whole life may be used when considering leaving an inheritance or providing liquidity for taxes related to real estate holdings.

To decide how much coverage is appropriate, add up all your liabilities such as mortgage on your house, future education expenses, and other know liabilities. You can also make up for a certain number of years of lost income in this calculation.

If you have a living trust, it’s usually advisable to make the trust the beneficiary.

Umbrella Policy

This insurance is meant to cover other un-expected liabilities such as lawsuits against you.

Adequate coverage should be at least your net worth, and this insurance is very inexpensive.

Long-Term Care Insurance

This covers medical needs beyond health care

insurance. It is best to consider this insurance between 55-65 years old and in good health.

Premiums range from $3,500 to $5,500 annually.

Auto Insurance

If you don’t drive much, some discounts may be available for fewer miles driven each year.

Other tips: consider consolidating your policies with one

carrier for additional discounts; check your eligibility

with USAA Savings Bank as they offer low rates; and ask your employer if they offer disability insurance!