Assessing Your Insurance Needs After Retirement

By on May 15, 2014

Beyond saving and investing, your insurance coverage should be a part of your retirement plans. People tend to buy their insurance when they are young and fail to adjust their coverage as they get older, unfortunately, under-insurance can leave retirees in debt or with little time to recover in the event of a big loss.

5 Essential Insurance Plans for Post Retirement

Don’t let insurance fall through the cracks — speak with your trusted agent to review your existing coverage, fill in the gaps and plan for coverage to last through your retirement years. When it comes time to plan, here are sive tips for assessing your insurance to ensure adequate coverage after retirement.

1 – Fully Insure Your Home and Personal Property

A significant portion of most retirees’ wealth is tied to their property, yet most homes are not fully insured for the cost of rebuilding or to replace all of the precious contents within. To be properly insured, retirees should seek policies with full replacement cost coverage, since there are always multiple factors pushing rebuilding costs higher, and inclusions for protection on personal property or special collections as any potential gap in coverage could represent a threat to a retirement plan.

Coverage for the Entire Cost to Rebuild
Whether it’s your primary residence or vacation home, if your house burns down or is otherwise destroyed, will your insurance cover the cost to rebuild? Most standard homeowners’ policies come with a set coverage limit (amount the insurer will pay in the event of a claim) and full rebuilding costs need to be added to the policy.

If your coverage limits are too low, you may not be getting as much as you thought from the insurance company, leaving you to make up the difference. Speak with with local realtors or contractors to get a estimate of per-square-foot costs before making changes to your policy.

Protect Personal Property and Valuables
Individuals who have accumulated a lifetime of belongings rarely know how much it would cost to replace everything in their home after a total loss. In addition to your personal heirlooms and electronics, there are those special high-value items you have collected over the years — jewelry, art, wine collections, vintage automobiles, etc. — which go underinsured.

Without a full catalog of personal property, contents coverage is too often based on low estimates, leaving many retirees with significant gaps in coverage. In addition, collection of significant value require additional coverage for damage, theft and other hazards that threaten the value of their collections.

2 – Protect Yourself From Lawsuits with Personal Liability Coverage

Personal liability coverage is important for retirees to consider, as they may be on a limited income or have less time to make up for lost wealth in the event of a costly lawsuit. The awards and settlements arising out of lawsuits over injuries in accidents or even libelous or slanderous statements online can reach into the millions of dollars and beyond. Review your current coverage and consider an umbrella liability policy which matches the value of assets at risk of liability suits.

Adequate coverage can be only a few hundred dollars per million dollars in coverage, an expense which can easily be offset by savings elsewhere your personal insurance policies.

*Find Ways to Save*
Many retirees are overpaying for their current coverage; equity, assets and less risky behaviors could be saving you money. Here are 3 ways you can cut your annual personal insurance costs:

  1. Raise your Deductibles to lower your premiums. Assuming more risk will pay off in the long-term.
  2. Consolidate your policies under one carrier. Most carriers offer discounts for trusting them with all of your business.
  3. Take advantage of loss prevention credits in which insurers discount premiums for good driving records, alarm systems and other loss-prevention measures protecting their homes or vehicles.

3 – Review Your Health Care Options Thoroughly

You may have coverage through your last employer, but is it the best deal for you? Medicare provides nearly universal health insurance coverage to people age 65 and older, but retirees may still be responsible for covering the gaps out-of-pocket. Speak with a trusted agent to compare individual, subsidized and supplemental coverages available. And review any recent medical charges for ways to save with your insurer or the hospital.

4 – Don’t Forget About Long Term Care Insurance

If you don’t already have a long term care plan, now is the time to ask your agent about long term care insurance. Neither your retirement savings, employer-based health coverage nor Medicare is going to sustain your care and medical expenses in your later years.

A long term care insurance policy can help you pay for property remodelling to accommodate your in-home care, cover the expense of that beachside nursing home, coordinate day care and other services under strict conditions. Speak with your financial advisor or estate planner to structure a policy based on your financial situation and future goals.

5 – You May Still Need Life Insurance After Retirement

Older clients may not need as much life insurance as they did when they were younger, but it’s important to carry enough coverage to replace lost income sources for survivors. If you purchase a permanent life insurance policy, such as whole life or variable indexed life, the protection can be an important source of tax-free income with a flexible investment tool to cover expenses such as estate taxes, pay off a mortgage or fund college tuition.

Proper Protection Brings Peace of Mind and Potential Future Savings

After retirement, insurance can protect you from financial disasters you can’t or don’t have time to afford. Don’t let your policies lapse without careful consideration with your trusted agent and financial advisor, and be sure to close any gaps in coverage so you are notleft holding the bag.