Insurance key to protecting finances

When we think of what it takes to have a secure financial future, investment accounts usually come first to mind. But those are just one part of the puzzle. Insurance policies can also play a role.

Sure, life insurance can help a loved one when a death eliminates an income, but before that happens, other insurance policies can prevent the pieces from falling apart.

With one in seven drivers uninsured, according to the Insurance Research Council, odds are good that you'll be struck by one. That number is expected to rise as the council says it sees that number go up with high unemployment as more people are unable to afford insurance. Your auto policy should have coverage for you if you are struck by an uninsured driver. But is the coverage enough to replace the damage that could be done?

For example, if you are unable to work for a period of time and lose income, will the coverage provide a payment to you for that? This is especially important for self-employed workers, as not being able to work would harm a business. Your insurance agent should give you a description of how uninsured coverage protects you against lost income. And the agent should help analyze how much coverage is needed. It may be worth it to check with multiple agents to see if they all agree on your situation.

Another policy that can help protect from loss of net worth is property insurance. A slip and fall by a visitor could require a payment from you for medical bills and possibly loss of income. That could force you to take out money from your investments to pay those bills if your property insurance does not have enough coverage.

Homeowners with pools and trampolines especially need extra coverage, as those are life-threatening. Dog owners should also be aware of their coverage, as dog bites account for 1 out of 3 homeowner insurance claims.

When speaking with an agent, also discuss umbrella insurance, which provides extra protection beyond coverage of the auto and home policy. An umbrella can provide protection for $1 million, $2 million or more. You can keep the auto and home coverage lower and supplement with an umbrella that protects against excess claims on either policy.

Beware of having the minimum coverage on your policies as these days medical and lawsuit costs are soaring. The last thing you want is to have built a net worth and then have it taken away because not enough insurance was there to protect against disasters.

Read more: http://www.bnd.com/2011/02/28/1610155/insurance-key-to-protecting-finances.html#ixzz1FIl4VCEU