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SMART MONEY STRATEGIES FOR EVERY AGE AND SITUATION
Your 40s and 50s—The Peak Earning Years

Section 6 of 11:
INSURANCE:
A Necessary Evil?
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When you spend money on insurance, you might feel like you are wasting hard-earned cash on something that produces no tangible benefit. This report will help you cut through the complexities of insurance so you can buy the most coverage for the fewest dollars possible. Learning about insurance is not as stimulating as uncovering the intricacies of the stock market or mutual funds, but it is equally important to your total financial plan.

You can learn to micro-manage your funds so that your money
multiplies itself. Use the techniques and tips and action strategies
included here in combination with those included in the other
sections and watch your money grow.

Read on and reap the financial rewards!

Jordan E. Goodman
America’s Money Answers Man
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INSURANCE:
A Necessary Evil

You will need all five types of insurance: car,
disability, health, homeowners (or renter’s), and life.

1.
Car Insurance

If you have been a careful driver, your car insurance rates should
be much lower than you paid in your daredevil days. However, the
value of your car may be greater if you have a larger, more
luxurious vehicle, so increase your coverage appropriately. Review
the standard methods of reducing your premium, such as installing
a passive restraint system and antitheft devices.

2.
Disability Insurance

Disability protection is also important because you could lose years
of income if you are injured or become sick on the job. You are
protecting a substantial income at this age, so don’t skimp on the
coverage.

3.
Health Insurance

Clearly, it is critical to have adequate health insurance. As you age,
medical problems tend to increase, and you will therefore probably
make more frequent claims. Insurers realize this too and increase
their premiums to account for their greater risk.

If you are covered through your employer, you might have to pay
larger deductibles and copayments if the policy is based on your
rising salary. If the premiums, deductibles, and copayments
become too expensive, look into a health maintenance organization
(HMO) or preferred provider organization (PPO) as a way of
capping your out-of-pocket health care costs.

Whatever you do, don’t let your health insurance coverage lapse;
you expose yourself to potentially catastrophic medical bills.

4.
Homeowners Insurance

If you own your home and have homeowners insurance, make sure
that your policy is up-to-date. Over the years, you have probably
acquired many possessions, and you want to make sure that your
policy will pay to replace them if your home is burglarized, hit by a
natural disaster, or otherwise harmed. If you own valuable artwork,
computers, jewelry, or other items, you might purchase special
riders to cover them. It’s easy to renew your homeowners policy
year after year without updating it. Now is the time to ensure that
you are well protected.

5.
Life Insurance

At this age, life insurance coverage is worthwhile if a spouse or
children depend on your income. As you move through your 40s
and 50s, term insurance premiums become more and more
expensive until they are often unaffordable in your late 50s.

Cash-value policies such as whole life, variable life, and universal
life allow you to lock in a premium rate or, at least, have some
choice in the size of your premium. The earlier you sign up for such
a plan, the lower your premium. If you start a cash-value policy in
your mid-to-late 50s, you probably will not have enough time to
accumulate significant cash values because such policies are loaded
with front-end costs, such as sales commissions.

As your children become self-supporting, you might reduce your
insurance coverage a bit, as long as your spouse could live on the
reduced death benefit. Keep enough insurance to cover funeral
expenses, taxes, and some ready cash for your spouse.

At this age, you might also look into annuities. You can use these as
tax-deferred savings vehicles funded by regular contributions. Or
you may want to use a lump sum from your employer’s benefits
plans to buy an immediate annuity, which will establish an income
stream starting at age 59 1/2.

To get quotes on all types of insurance in one spot:

Get Quotes!

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RESOURCE | RESOURCE | RESOURCE
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