If you want to simplify your personal finances make sure your covered. What I mean by this is you want to make sure you have the appropriate amount of insurance coverage. You do not want to be left standing naked when a medical, natural disaster, or other financial situation occurs which can place a significant financial burden on you.
Often times we may cut corners or look for cheapest insurance coverage. This results in not have proper insurance coverage because we say hey its not going to happen to me. But you never know its always better to be prepared for the situation than unprepared. Think of it this way can you afford to rebuild your home if it was significantly damaged without having adequate insurance coverage? Probably not. So why put your financial future at risk to save a few extra bucks each month.
Here are a few steps for you to take to make sure you are not left standing financially naked:
Annually review your insurance policies
Dust off that old policy to determine the amount of coverage you have as well as determine what is covered. Have you purchased an insurance policies and never reviewed the policy until you needed to place a claim and then find out what you thought was covered is not covered. Often you may have established your policy several years ago and your financial situation was different than it is today. So remember to review your policies to understand your coverage and make sure you have adequate coverage.
Review your deductible
Know your deductible amount and make sure it is adequate. An easy way to lower your lower insurance bill is to increase your deductible or reduce the amount of coverage you carry on the policy. Before you decide to increase your deductible consider the impact this can have on your financial situation. Yes it can lower your monthly or annual payment but what will happen when you need to file a claim will you have the funds to cover the repairs. For example, you may be able save money by increasing your deductible from $1,000 to $2,000 but do you have the additional funds saved in your emergency fund if something does occur. Look at the worse case and if your able to cover yourself without putting yourself in a significant financial burden if something does occur go for it. Just think before you do something just to save a few bucks each month. If you do decide to increase your deductible to save each month consider put the additional saving in your emergency fund. The long-term consequences can be more damaging than the short-term relieve you will receive.
Financial stability of insurance company
How stable is your insurance company will the company be able to cover your claims. From year to year the financial stability of your insurance company can change which may impact their ability to pay your claims. What you don’t want to happen is your insurance company to go out of business when you need them. Trust me it does happen. Luckily, my claims were paid. So check on your insurance company’s rating to find out their financial situation.
Adequate coverage
Review your current financial situation and determine your appropriate coverage. For example, has your home increased in value and you may need to increase the coverage. Have you made improvements or additions to your home which were not originally covered. Do you have significant cash or emergency fund to cover a higher deductible or do you need to lower your deductible due to lack of cash reserves. Do you have additional drivers in your household and need to review your current auto insurance. You have a new addition to the family and you need to review your medical coverage. Make sure you are covered for your current situation. What was sufficient last year or several years ago may not be sufficient coverage today. Make sure you coverage meets your current needs.
Pay your premium on time
One of the worse feelings is finding out your insurance has been dropped because you did not pay your premium on time. Most insurance policy premiums have 30 day grace periods, which allows you to pay your premium within 30 days of its due date. However, if you forget to pay it within those 30 days you could be dropped and it is possible you may have to wait 30 days or longer to be reinstated. This means you will not be covered during this period so you may want to cross your fingers and hope nothing happens during that time. An easy solution to this is to set up an automatic debit from your bank account to pay the premium or have the premium automatically charged to your credit card.
Here are six insurance policies depending on your situation you should consider so you are not left standing financially naked:
1) Homeowner’s / renter’s insurance
2) Medical insurance
3) Car insurance
4) Natural disaster insurance
5) Life insurance
6) Disability insurance
If you want to live a simple financial lifestyle take action now by reviewing your existing insurance coverage to make sure your adequately covered so your not left standing financially naked wondering what to do now or how am I going to pay for
When was the last time you reviewed your insurance policies to make sure your coverage is adequate for your current financial situation?
Til next time take it one step at a time to simplify your finances.
If you enjoyed these tips and would like to manage your finances better, sign up for Simple Financial Lifestyle newsletter for more great ideas and tips to simplify your finances.
