As you age, your insurance needs change. While in your younger years you worry about protecting your property and income, protecting your assets becomes a higher priority later in life.
"Changes in your life can mean big changes in your insurance needs. A change in marital status, the birth of a child or a purchase of a home can all trigger a gap in your coverage. That's why (you should revisit) your policy at least once a year, or whenever you experience a big life change." says Jeff Reinig, head of personal lines underwriting from Farmers Insurance in Los Angeles.
Here, experts recommend the insurance needs to consider – and the gaps to avoid – as you move through different stages of life.
In your 20s and 30s
Experts say now is the time to set yourself up for the future.
Start by protecting your valuables, even if they are few to speak of at this point. Homeowners, condo or rental property insurance will cover the cost of replacing or fixing your belongings, and you should also protect unique and valuable assets, like that diamond engagement ring, for instance, with a floater on your policy.
Married or have children? Then you definitely need some form of life insurance. Consider term life insurance, a more affordable option at this stage. Term policies cover you for a specific length of time and pay only a death benefit. And plan to purchase group life insurance through your employer if it's offered. Another factor to consider when purchasing life insurance is your debt. More debt equals a higher need for life insurance.
Carpool? You should consider the liability impact of a car accident, especially if you're carpooling to work or driving your kids – and their friends – to practices. Ideally, your liability insurance will cover your assets in the event of a lawsuit due to a car crash.
In your 40s
The key here is your health and how it has changed or will change.
"You really do have to take a hard look at how much coverage … you want to lock in for the long term, because your health can start to go downhill and you want to make sure you don't paint yourself in a corner," says Cal Brown, market manager for Savant Capital Wealth Management in McLean, Va.
Remember, the less healthy you are, the more it costs to buy life insurance, and in some cases, you won't be able to purchase it at all.
Your income might grow, but so will your family's dependence on that income. You'll likely acquire more assets as well, so evaluate your life insurance and home insurance to make sure it's adequate. You – or your family – don't want to uncover a gap in coverage in case an unexpected accident occurs.
Keep in mind, your children also present an increasing risk as they start driving, going to unsupervised parties and doing other things that raise your risk. You will need to add your driving teens to your auto insurance policy, and experts recommend increasing your liability coverage to cover the potential cost of damages or injuries your kids might cause during this time.
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