As the year comes to a close, it’s a natural time to conduct an annual insurance review.
This is an important process that ensures that all your personal, business, and property and casualty insurance policies are up to date.
Life changes, inflation, and new risks mean that without regular updates, your insurance coverage could leave you dangerously exposed to a wide variety of potentially catastrophic risks. Our suggestion? Start the new year knowing you and your loved ones are fully protected by following this comprehensive year-end insurance checklist.
Life Insurance
A surprising number of Americans are underinsured when it comes to life insurance.
In fact, a recent report found that more than 100 million adults either lack life insurance or have insufficient coverage. This leaves many families vulnerable to financial hardship if the unexpected occurs.
Another study highlighted that the average life insurance gap in the U.S. stands at $225,000, meaning many individuals don’t have enough coverage to protect their dependents fully.
Most widows and orphans rely on the income of a family breadwinner – and in many cases, two breadwinners!
Ask yourself these questions, and discuss them with your Personal Benefits Manager:
- Are your life insurance beneficiaries up to date?
- Do you have secondary and contingent beneficiaries designated?
- Are any beneficiaries minors? Have you named UGMA or UTMA trustees for them?
- Have you established trusts to hold money for beneficiaries who can’t or shouldn’t receive the money directly themselves? This is something you should discuss with your attorney, as well as your life insurance agent.
- Is the total death benefit sufficient to sustain your surviving family members, and replace at least most of your income when you’re no longer able to be there and provide for them yourself?
- Have you had a pay raise since you last updated your life insurance? Do you expect one in the future?
Work on Converting Term to Permanent Life Insurance
- Plan for later in life. When your current term insurance expires or is no longer affordable, do you still want or need a death benefit? Permanent (whole life or universal life) insurance is designed to stay in force as long as you do.
- Do you need final expense insurance?
- Do you have a family business, real estate, or other illiquid assets that would be difficult to split up among multiple heirs or to sell quickly? A permanent provides tax free money for you to equalize your legacy among your children and grandchildren who don’t inherit your home or family business. This is an important but overlooked part of business succession planning.
- Do you have life insurance you don’t need anymore? Consider converting the value of your policy to an annuity to provide income to supplement your retirement. You can do this tax free, under a Section 1035 exchange.
Your MediGap Advisors Personal Benefits Manager can help you with any of the above life insurance issues.
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Health Insurance
Your health insurance needs can change year to year, especially with the evolving healthcare landscape. An annual review ensures you’re getting the most from your plan.
- Is your Medigap or Medicare Advantage plan still adequate for your needs? Are you aware of any changes to your policy for the coming year? The Fall Enrollment Period lasts from October 7th through December 15th. This is the best time to review your Medicare coverage.
- Would you benefit from switching to a lower-cost health sharing plan? The Medi-Share 65+ health sharing plan is a more affordable Christian alternative to Medigap. Costs start at just $99/month for those ages 65-74, and $150/month for those age 75+.
Once you meet a $500 annual household portion, the plan shares 100% of all out-of-pocket Part A and Part B costs for the year. That includes deductibles and the 20% Part B coinsurance but not premiums.
There’s a six-month waiting period before Medi-Share 65+ will share costs related to pre-existing conditions. But this is waived if you enroll during the Fall Enrollment Period (October 7th through December 15th) or during your six-month initial enrollment window that starts when you enroll in Part B.
There’s no limited enrollment period with Medi-Share 65+. You can self-enroll any time at the link below. Or contact your MediGap Advisors Personal Benefits Manager for a personalized analysis and recommendation.
Long-Term Care Insurance
Long-term care (LTC) insurance is a vital piece of retirement planning. As healthcare costs rise, LTC insurance can protect your assets from being depleted due to chronic illnesses or disabilities.
- Is your long-term care insurance policy up to date with the right level of coverage?
- Consider purchasing more coverage if your assets or healthcare needs have changed, or you can afford the extra protection.
- Consider using an HSA to pay your qualified long term care insurance premiums with tax-free dollars.
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Property & Casualty Insurance: Protect Your Assets
Personal insurance lines, such as life, health, disability, and long-term care, protect you and your family against a variety of hazards to you, personally.
But if you have assets worth protecting, that’s only half the picture.
There’s a whole other set of insurance solutions designed to protect you against a wide variety of hazards to your home, cars, and other belongings. So if a calamity befalls you, you’ll at least have the cash to rebuild and replace the belongings and property you lost.
Don’t neglect these important forms of coverage in your annual insurance review:
Homeowners Insurance
- With home values rising in many markets, is your homeowners insurance keeping up? Make sure your policy covers the current replacement cost of your home, not just the purchase price.
Car Insurance
- Have you made any major purchases or changes to your vehicles this year? Ensure your car insurance is updated to reflect any changes in drivers, new vehicles, or policy enhancements.
- If you want your policy to protect you against the cost of repairing or replacing your car after a collision, you should purchase collision coverage.
- If you want additional protection to protect your car against theft, flood damage, or other hazards, you should purchase comprehensive coverage.
Flood, Windstorm, and Special Risk Coverage
- If you live in an area prone to floods, windstorms, earthquakes, or sinkholes, do you have specialized coverage for these risks? These types of events aren’t typically covered by standard homeowners insurance, so now is the time to add any necessary protection.
Business Insurance
For business owners, reviewing insurance needs annually is critical for protecting assets and mitigating risk.
- Is your business insurance updated to cover new risks such as cyber threats, which are increasingly targeting small businesses? Cyber insurance can protect you against data breaches and ransomware attacks.
- Do you have employees? You could be liable for a variety of possible causes, such as a discrimination or harassment suit. Employer’s liability insurance helps you mount a defense, if necessary, and helps pay the cost of any judgments or settlements.
- Consider adding or updating key person insurance or buy-sell funding to ensure continuity of the business if something happens to a crucial employee or partner. These are personal insurance lines, but are important business considerations.
- Do you need to update your professional liability insurance? Also called “errors and omissions” or “professional liability” insurance, these are important policies that help protect your wealth against mistakes you may make in the course of your profession.
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Protect Your Future with an Annual Insurance Review
An annual insurance review is essential to making sure your coverage evolves with your life.
Whether you’re updating life insurance beneficiaries, reviewing your health plan, or adding new business coverage, the year-end is the best time to take stock of your protection.
For personalized help with keeping your personal lines policies (life, health, long term care, and annuities) up to date or adding any necessary coverage, contact a MediGap Advisors Personal Benefits Manager. They can provide expert guidance on maximizing your benefits, safeguarding your future, and ensuring you aren’t left underinsured.
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Lou Spatafore works for MediGap Advisors. As a PBM, his focus is to help people find the best Medicare plan for his clients. Read my full Bio.