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April 04
How Insurance Needs to Change Over a Lifetime

How Insurance Needs to Change Over a Lifetime

Most Americans understand that having adequate insurance is a fundamental way for them to protect themselves and their loved ones. Quite often insurance is viewed as something that a person signs up for only once, continuing to pay the premium, and then collects on it in the event of insured damages. While this is certainly a major part of the equation, it does not tell the entire story. Namely, it doesn’t take into account the way a person’s insurance needs change over the course of his or her lifetime. What follows is a list of several key types of insurance and the ways that age and life circumstances can impact cost and coverage.

Health Insurance

Regardless of other sets of life circumstances health insurance is a requirement for all Americans. In fact, the new healthcare reform legislation has made it the law. Health insurance is also a great example of a type of insurance that changes over the course of a lifetime.

In the earliest years of a person’s life they themselves aren’t really responsible for worrying about health insurance coverage. Instead that responsibility falls to their parents or legal guardians. A minor child will usually be covered by a parent’s or guardian’s group or individual health insurance policy. New legislation allows even adult children to remain on their parents’ health insurance policy up to the age of 26.

After age 26 the person will need to get their own health insurance coverage, which will typically be covered through their employer or by an individual insurance plan. A very important factor to consider when changing jobs is the way that the career change will affect health insurance coverage. This is particularly true for people who have coverage through an employer but are about to retire. They will now need to purchase their own health insurance and their healthcare costs are likely to rise considerably.

Auto Insurance

Since so many people do remain on their parents’ health insurance until they are in their twenties, it is common for auto insurance to be the first type of insurance that a person is responsible for paying themselves, though once again depending on circumstances they may be able to continue receiving coverage from a parent’s policy for some time.

Auto insurance is another prime example of a type of insurance that may need to be adjusted over the years. As a general rule, people are more likely to have full, comprehensive coverage on a newer vehicle while they may only have liability coverage on an older vehicle. The cost of auto insurance is also likely to vary based on driving record, age, gender, geographic location, and special discounts. Since many of these factors will change over time it is crucial that auto insurance policies be reviewed and updated periodically. As they enter their golden years and beyond, many people decide to quit driving altogether, and thus may be able to cancel their auto insurance.

Life Insurance

Life insurance needs are very dependent on life circumstances. The primary role of life insurance is to provide financial protection to the dependents of a wage earner. Who is a dependent and how much protection they need will often vary greatly over the years.

Children often do not have life insurance at all because generally no one is financially dependent on them. Once a person marries or enters a serious long-term relationship he or she may get life insurance if the other person does not work outside the home, is still in school, only works part time, or otherwise makes considerably less than the potential insured, and thus depends on that person’s income to some extent to survive.

If a person or couple has a child or children then their life insurance needs typically rise considerably. That is because double income families may need both incomes to get by, or in the case of a single-income family they will need significant coverage to protect against the loss of the primary earner. However, it is often important to insure stay-at-home parents and caregivers as well because often the loss of such a person will also incur a financial loss since these services will now have to be paid for.

In middle age some couples or individuals or able to reduce their life insurance coverage as children grow up and become financially independent. However, this is also the age when elderly parents, or disabled relatives may begin to depend on the couple or individual, and thus it may be necessary to continue paying for higher life insurance coverage to provide for these people’s care in the event that something happens.

In the golden years a couple or individual may find relatively few people depending on them financially, but they may wish to continue life insurance coverage anyway to provide a financial legacy when they die or to help cover funeral expenses and estate tax.

Homeowners Insurance

Homeowners insurance is a crucial coverage type for all people who own their own homes. It protects the home from an array of accidental damage, vandalism, and even theft. It also provides some coverage to many of the belongings inside the home.

The amount of homeowners insurance needed will vary based on the value of the home and its contents. Because home values do fluctuate over the years it is important to review coverage periodically and ensure that it is adequate. Likewise, people may purchase or sell valuable possessions over the years, or begin or stop collecting a valuable item, as such the homeowners’ insurance policy may need to be adjusted up or down accordingly.

Specialty Insurance

In addition to these big types of common insurance, there are a number of smaller, specialty Types of insurances. Like the others the coverage needed may vary over time. A good example is jewelry insurance which may need to be increased or decreased relative to the value of the jewelry collection. Another good example is boat or RV coverage which may need to be adjusted to be more or less comprehensive relative to the vehicle’s value and the owner’s goals and activities.

Re-evaluating insurance coverage periodically can seem overwhelming and stressful. It is so helpful to have a trusted insurance agent you can go to for advice and questions. At Beaty Insurance we are always happy to consult with our customers about their insurance needs and discuss their own individual goals, concerns, and resources.