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Reviewing Insurance Coverage at Various Stages of Life Thumbnail

Reviewing Insurance Coverage at Various Stages of Life

Insurance

One of the earliest conversations we have with clients involves insurance coverage. One of the benefits of working with a fee-only financial planning firm like ours is that you are never sold products and we do not ever receive commissions. This helps us to independently evaluate the proper types of coverage and policies needed for our clients. 

Because insurance needs change over time, it is important to consistently work with a firm that can help you navigate these conversations with you. In this blog, we’ll explore the best ways to review and adjust your insurance coverage from young adulthood to retirement. 

Young Adulthood: Building a Foundation

As a young adult, you might feel invincible, but this is still a good time to start thinking about insurance. Here are the key types of insurance you should consider:

  1. Health Insurance: Essential for everyone, health insurance covers medical expenses and protects against unexpected, high medical costs.
  2. Renters or Homeowners Insurance: Protects your personal property and provides liability coverage in case someone is injured on your property.
  3. Auto Insurance: Mandatory if you own a car, auto insurance protects against vehicle-related damages and liability.
  4. Disability Insurance: Depending on your profession, disability insurance may be important and provide protection if you’re unable to work due to illness or injury.

Early Family Life: Protecting Your Loved Ones

If you’re starting a family, your insurance needs increase significantly. Here’s what to focus on:

  1. Life Insurance: This is the time when life insurance becomes critical. We believe term life insurance is almost always the best choice because it provides substantial coverage at a lower cost. It ensures that your family is financially protected if something happens to you. Avoid the pitfalls of whole and universal life policies, which combine insurance with investment components. These products typically come with high fees/commissions and unnecessary complexity.
  2. Health Insurance: Ensure your health insurance covers maternity and pediatric care. Consider a family plan that offers comprehensive coverage for all members.
  3. Homeowners Insurance: If you’ve bought a home, make sure you have sufficient coverage for the dwelling and personal property, along with an umbrella policy.
  4. Disability Insurance: Like our comments in the young adulthood section, this may come into play more depending on your particular situation.

Mid-Life: Adjusting to Changes

In your 40s and 50s, your insurance needs may shift due to changes in your financial situation, health, and family dynamics.

  1. Life Insurance: Review your term life insurance policy to ensure it still meets your needs. If your children are grown and financially independent, you might need significantly less coverage. However, if you still have dependents, maintaining or increasing coverage is important.
  2. Health Insurance: As you age, health issues may become more prevalent. Ensure your policy covers necessary screenings, treatments, and medications.
  3. Long-Term Care Insurance: Consider the pros and cons of long-term care insurance to cover the costs of assisted living, nursing home care, or in-home care later in life.

Pre-Retirement and Retirement: Ensuring Stability

As you approach retirement, your focus should shift to preserving your assets and ensuring a comfortable lifestyle.

  1. Health Insurance: Transition from employer-provided health insurance to Medicare. Consider supplemental insurance (Medigap) or a Medicare Advantage plan to cover additional healthcare costs.
  2. Life Insurance: If your term life insurance policy is expiring, evaluate whether you still need coverage. In many cases, if your financial plan is solid and your children are independent, you might not need life insurance.
  3. Long-Term Care Insurance: If you haven’t already, seriously consider long-term care insurance to protect your savings from the high costs of long-term care.
  4. Homeowners Insurance: Ensure your policy provides adequate coverage for your home and personal property. Consider additional coverage for natural disasters if you live in a risk-prone area.

The Wrap

Regularly reviewing your insurance coverage is essential to ensure you and your loved ones are protected at every stage of life. Start early with basic coverage, increase your protection as your responsibilities grow, and adjust your policies as your needs change. By understanding the pitfalls of whole and universal life policies, you can make informed decisions that align with your financial goals and provide the security your family deserves.

We’re here to help you navigate these decisions and create a tailored insurance strategy that meets your unique needs. Contact us today to schedule a consultation and take the first step towards comprehensive financial security.

Authored by Stephen Blahovec and Michael Rausch of North River Wealth Advisors.  We are an independent, fee-only financial planning and investment management firm located in Pittsburgh, PA servicing clients locally and across the country.  To learn more, contact us here.

This content is developed by North River Wealth Advisors from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.