How to Revise Your Insurance Coverages When You Retire
How is it that Monday, Tuesday and Saturday can all feel just exactly the same? How can it be that you just don’t care what day of the week it is?
Whether you’re a wealthy guy or gal who’s able to retire in your 40’s, or a more typical American who worked for 40-some years and are now reaching retirement, you’re about to begin enjoying a whole new lifestyle. Part of that is enjoying each day without the worry of commuting to work or waiting for the weekend to have a couple days off. In retirement every day is just about like every other day. It’s a great season of life.
As you enter retirement there’s one last “piece of business” to handle: your various insurance policies. After all, for many (if not most) people, retirement is a time when a bit of frugality pays off. So let’s see what you can do to save money on your insurance policies … and keep the protections you need in place. In particular, let’s take a look at these policy types to see how you can best handle them when you retire.
· Others – Long term care, disability, umbrella policies and more
What to Do about Your Homeowner’s Insurance
If you’re still paying a first or second mortgage on your home, the lenders demand that you insure your home against losses. But whether you pay a monthly mortgage note or not, you can take a few minutes to review the deductible amounts you’ve chosen. Changing a deductible from, say, $1000 to $5,000 can cut substantial expense off your premium.
Does it make sense to cancel your homeowner’s insurance once you’re retired and the mortgage is paid off? No. Not at all.
You may be able to pay for repairs to your home – a tree that falls on your house and crushes the roof, water damage in your basement, a fire on your screened-in porch, and so forth. If you have the cash reserves to pay for even major damages out-of-pocket, that’s when you should revise your deductibles and reduce your premiums.
But replacing the entire home in the event of a fire or other disaster is, for many people, enough to wipe out their retirement savings. Keeping your homeowner’s policy in force removes that risk.
If You Have a Second Home …
If you’re fortunate enough to have a second home – perhaps in the North Carolina mountains or in one of Florida’s perennial favorite snowbird destinations – you’ll want to continue homeowner’s policies on both homes.
TIP: If you leave your primary residence vacant for many months at a time, contact your insurance professional before you leave. A vacant home may not be covered under your existing policy. Vacant homes are more susceptible to break-ins and burglary, among other hazards. Some policies exclude many hazards – say, a burst pipe that floods the home – when it’s left vacant for an extended period.
TIP: If you own your second home, talk with your insurance professional to see if the same insurance company can insure both homes and offer a “multi-home” discount. With homes in different states, insurance laws become a bit complex. At Quoteasy we’ve dealt with snowbird insurance matters for many years and very likely can find you coverage for both homes no matter where they may be located.
Life Insurance: Do I Still Need It?
Maybe. Your personal situation is unique to you. Here are the issues to consider.
· People who rely on you. If you have a spouse who outlives you, you’ll want to provide for him or her through your life insurance death benefit. Those dollars are not taxable by the IRS, so they may have even more relative value than the money in your 401-K or other retirement accounts – which are taxable income to your surviving spouse. In some cases your insurance professional can work with your insurance carrier to adjust the death benefit down to a lower level (and a lower premium cost). For example, if you’ve been carrying a $500,000 policy for many years, it is often possible to keep that policy intact, but drop the death benefit to, say, $250,000. Making such an adjustment is much preferred to taking out a new $250,000 policy because you won’t need to meet medical and health standards a new policy underwriter would require.
The Social Security Administration  provides a “life expectancy calculator” you may find helpful in planning for the amount of death benefit you’ll want to leave your spouse.
· Your children. Many of us hope to leave a nest egg for our adult children. Discuss your wishes with your insurance professional to find the lowest cost solution that can help your kids buy a new car, put a down payment on a house or begin a college savings plan for your grandchildren.
· Part-time job? If you’re working a part-time job, that income disappears when you die. Take that into account when planning the money you’ll leave to your spouse.
· Your estate. The legal definition of your estate includes both your assets and liabilities. Is the value of your assets going to trigger the Federal “death tax” and make your heirs responsible for paying it? Alternately, do you have debts that will need to be paid off? You can discuss these issues, too, with your insurance professional to arrive at the optimum death benefit amount.
· Funeral expenses. The National Funeral Director’s Association  pegs the median cost of a funeral at $7,045, yet funerals can easily run $20,000 or more depending upon the options your survivors choose. (The non-profit Funeral Consumers Alliance  provides guidance on arranging a dignified funeral at the least cost. It’s worth checking into their services). In any case, you’ll want to reserve a portion of your life insurance benefit to pay for final services.
How to Review Your Auto Insurance to Save Money
Now that you’re no longer working and commuting to work every day, your total annual mileage will probably drop. That mileage is one of the factors that determines your premium rates. Contact your insurance professional to adjust your mileage. At the same time, ask about electronic devices being offered by many insurance carriers. These tiny devices plug into the diagnostic port usually located below your steering wheel. They monitor your mileage, how much night driving you do and keep tabs on any aggressive driving (fast starts, hard braking, dangerous cornering) that occurs. If you drive safely with limited mileage and little night driving, you can earn a reduction in your premium payments.
Similarly, many insurance carriers offer discounts for people who take a “Safe Driving Course.” These are generally one-day classes, so you don’t need to worry that you’ll have to spend an entire week with an instructor sitting next to you in the car. Check with your insurance professional to find the training programs your carrier has approved.
As always, you can consider increasing the deductible on your collision insurance coverage to reduce your premium costs. If your vehicle is an older model, reducing the comprehensive coverage (or eliminating it altogether) will save additional dollars.
TIP: One place you don’t want to scrimp is your liability insurance coverage. Each state requires you to carry a certain amount of liability coverage. It pays for damages and injuries to others if you have an accident and are held responsible. Florida, for example, requires only 10/20/10 – which means the policy would pay $10,000 for injury to another person; $20,000 for all injuries to other people involved in the accident; and, $10,000 for damage to property (the other driver’s car, for instance). These state-mandated limits are far too low to pay for real-world traffic accidents in today’s society. Insurance professionals generally recommend 100/300/100 or greater. You don’t want to be caught with tens or hundreds of thousands of dollars of medical bills because you scrimped on your liability coverage.
Likewise, dropping uninsured and under-insured motorist coverage is worth reviewing. This coverage pays your medical expenses if you’re in an accident with an at-fault driver who has no insurance (and is driving illegally) or who has just the bare minimum required by law. If you have suitable health insurance this coverage may not be useful, however it’s a small price to pay if you have no health insurance.
Is There More?
If you’ve been carrying disability insurance to protect you against loss of income, it’s pretty clear you can drop that coverage. Further, if you’re looking for a low cost umbrella policy that can potentially reduce your overall insurance costs, we can help. If you’re interested in long term care insurance but haven’t taken action on it yet, an insurance professional can certainly help you get started.
According the AARP,  some 8,000 people in the U.S. turn age 65 every single day. That remarkable statistic began in 2011 and will continue until 2029. That’s a lot of people retiring – over 52 million. Here at Quoteasy we’ve worked with countless people reaching retirement age, helping them organize their insurance policies to give them the best protection at the lowest price. We’ll apply every discount available and give you top notch professional advice. Click to call us at 305 587 2410 to get started. We’re here to help.
(1) http://www.ssa.gov/oact/STATS/table4c6.html (2) http://nfda.org/about-funeral-service-/trends-and-statistics.html#fcosts (3) http://www.funerals.org (4) http://www.aarp.org/personal-growth/transitions/boomers_65/