By Jan Millin, CPCU, CIC, Certified Insurance Counselor
PERSONAL INSURANCE NEEDS:
After divorce or separation, you're on your own. Arranging your insurance needs is important, but you my not be sure what you need or where to begin. It's important that you work with an agent who understands your new situation. Explain to him/her your needs and concerns. You need to protect all your assets both tangible and intangible. A good agent, especially an insurance counselor can help you identify them and put together an insurance program tailored to meet your personal needs and budget.
These policies cover your home, personal property, additional living expense and personal liability. If you own a home try to insure it on a guaranteed replacement cost basis. This will "guarantee" that you are fully insured if your home must be rebuilt. Your personal property (contents) should be insured on a replacement cost basis. This will reimburse you what it costs in today's dollars to repair or replace it. Even if you just rent, it's important to cover your personal property - furniture, clothing, etc.- and personal liability. Special items such as jewelry, furs, fine arts and collectibles should be scheduled or specifically insured. This will give you broader coverage and insure them for their full value.
Personal auto insurance includes the following coverages: liability, tort (full or limited in Pa), medical payments, uninsured motorists, underinsured motorists, work loss, funeral expense, accidental death, comprehensive, collision, towing, rental reimbursement and lease protection. In Pennsylvania liability and medical payments are required by law. Comprehensive and collision are required if the vehicle is financed or leased. Uninsured and underinsured motorist coverages protect you if the other driver is at fault and either doesn't have insurance or doesn't have enough insurance to cover your medical bills. Work loss is like a little disability income policy. Limited tort premiums are lower but you give up your right to sue unless you're "seriously" injured. You may want to discuss these options further with your attorney or insurance agent. Remember to contact your agent when you move to a new residence so they can make premium adjustments. Failure to do so may result in being denied coverage on claims.
These policies start at a $1,000,000 limit. They provide an additional limit of liability over the limits on your primary homeowners and auto policies. The umbrella policy starts where the primary policy ends if there is a major law suit (auto fatality for example). These policies are usually recommended for professionals, people that own real estate or significant assets, or people that just want to make sure they have enough liability protection.
There are three main types of health insurance programs- traditional, PPO (Preferred Provider Organization) and HMO. Traditional plans involve a deductible and a coinsurance limit. Covered expenses are paid in full by the insurance company after that. These plans offer freedom of choice in selecting medical practitioners, but are often higher in premium because of this freedom. High deductibles can be selected to help keep the premiums down. With HMO's your care is coordinated by your primary care physician. Well care is usually covered. You must stay within the network of providers. You only pay your co-pay amount for any doctor visit. PPO's are a combination of the two (Personal Choice is a good example). If you use the services of an in-network provider you pay only your CO-pay amount. If you go outside the network a deductible and coinsurance limit apply.
DISABILITY INCOME PROTECTION:
Your most important asset is your ability to earn an income. Without a paycheck where will the money come from to pay the bills, especially if there isn't a spouse's paycheck to fall back on. This coverage consists of a waiting period (like a deductible), a benefit period (length of time during which benefits are paid) and a benefit amount (the amount of income you will receive monthly). Be sure to check the definition of "your occupation". Disability income policies will often limit coverage to the inability to perform the duties of your own occupation for 2 years. Thereafter benefits will only continue if you can't perform the duties of any occupation for which you are suitably trained or educated.
There are basically two types of life insurance - permanent and term. Permanent insurance guarantees the premium and death benefit for life as long as the premiums are paid. A cash value builds up that can be borrowed or used to pay future premiums. Term insurance covers you for a specific length of time. At the end of the term you must reapply, paying the premiums based on your age and health at that time. Premiums are lower for term insurance, but because it "doesn't last a lifetime" you may find your insurance ends before your need for it ends.
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