By Allison Bisbey Colter
Whenever we reach one of the milestones that mark our lives, we need to take a look at whether we have adequate insurance coverage to protect us and our loved ones. Here's a list of what you need.
You Got Your First (Full-Time) Job! There’s nothing like bringing home your first paycheck. You may have held part-time jobs in school, but chances are you’ve never made this much money before.
But with this financial independence comes responsibility. If you’re living on your own for the first time, you’ll need renters insurance for all of the things you’re accumulating – a professional wardrobe for work, furniture, computer, etc.
Renters insurance can also cover the cost of staying in a hotel if your apartment burns down or otherwise becomes uninhabitable, and it covers you if someone hurts themself in your apartment and sues you. And best of all -- it's pretty cheap, $100 a year in some cases.
If you’ll be driving to work, chances are you are no longer covered under your parent's auto insurance and will need your own policy.
Finally, disability insurance is probably the last thing on your mind at this age, but young people are four times more likely to be disabled than die, according to the Insurance Information Institute, a trade group.
Many employers offer this coverage, which replaces lost income if you are injured by non-work activities and unable to work, though it may be limited and you may have to pay for it out of your own pocket. Of course, if the injury is work-related, then workers compensation coverage applies. Check with your employer.
You’re Married! If you and your spouse both work and you don’t have any dependents, your insurance needs may not change much once you’re married. But if one of you is still in school, or would be unable to pay all of the bills in case of the death of the other, it's time to think about life insurance.
If you’ve just bought your first home, consider buying enough to pay off the mortgage. Term life, which provides coverage for a limited period of time, is typically the best deal.
And if you don't already have it, disability insurance is nearly as important as life, particularly if you're relying on one person's salary.
If you buy a home after getting married, you’ll also need coverage for the value of your home and its contents with homeowners insurance. If you are living in a condo or coop, you depend on two insurance polices for protection: your own coverage and the insurance purchased by the condominium or co-op board for the common areas of the property, like the roof, basement, elevator, boiler and sidewalks.
The condo or co-op association may be responsible only for insuring a unit up to its bare walls, floor and ceiling. The owner may have to insure kitchen cabinets, built-in-appliances, plumbing, wiring, bathroom fixtures and so on.
You’re Parents! If you still don’t have life insurance yet, this is the time you absolutely need it. In addition to paying off major debt, such as credit cards or the mortgage, you’ll need to think about replacing your income or your spouse’s income if one of you dies before the child graduates high school or college.
Even non-working parents need life insurance, because you would have to pay someone else to take care of the children.
This is also a good time to update your homeowners insurance, because you will inevitably acquire more possessions as the children grow and need more stuff.
And once the kids reach driving age, you’ll need to add them to your auto policy.
The Kids Have Left! Once the kids have left the nest, your insurance needs will inevitably change. You may keep them on your auto policy while they’re in school, but once college is paid for you they need to get their own, and you certainly won’t need as much life insurance after they graduate.
Though you may not need it for several decades, this is a good time to start thinking about long-term care insurance, which pays for help performing everyday activities like eating, dressing and bathing if you become chronically disabled.
As a general rule, the earlier you consider buying long-term care coverage, the cheaper it will be. Once the premium is set, it stays at that amount for the life of the policy, unless the claims for the group of people who have bought that type of policy require that rates for the group be raised, according to the III.
You’re Retired! Are you downsizing? Moving to another part of the country? If so, be sure to update your homeowners insurance. Obviously, you won’t need disability insurance now that you’ve stopped working and are living off of your assets. But it’s not too late to consider long-term care insurance, although it will cost you more now.
Allison Bisbey Colter is a freelance writer in New Jersey whose work has appeared in The Wall Street Journal and American Banker. She is a former editor at TheStreet.com and a former reporter for Dow Jones Newswires.
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