Should You Shelter Under Umbrella Insurance?

For most people, competing financial demands means balancing the different types of insurance coverage they need. You want the best possible auto insurance coverage, but the cost of that could affect how much homeowner’s insurance you can afford. Or an expensive homeowner’s policy could force you to limit your liability coverage. The thing about insurance coverage is that you never know when you may need it. If you knew in advance what the future holds, there would be little need for insurance. 

What an Umbrella Policy Offers

An umbrella policy is what its name says. It is a policy that covers you if you are found liable for injury or damages beyond the coverage of your homeowner’s, renter’s or auto insurance policies. For example, if you are a tenant and are sued by your landlord and your legal costs and judgments are more than the coverage you have under your renter’s insurance policy, an umbrella policy will cover the excess costs. The coverage will, of course, be up to the limits of the umbrella policy itself. The benefits of an umbrella policy are clear, but many people wonder if increasing the coverage on their existing policies is not a better option than taking out another one. The answer to that is an umbrella policy makes sense because it gives you the liability protection you need at a low cost.

Because these policies are rarely used, the costs are low. The cost for the first million dollars of coverage is typically between $150 and $300. The second million could cost just be $75 and the third only $50. These are typical numbers and the cost could vary depending on your location, risk profile and insurance company. Keep in mind that an umbrella policy does not cover damage to your own home, automobile or other personal properties.

Who Needs It?

An umbrella policy is a good idea for anyone with assets of $1 million or more. It is also recommended for those who may be presumed to have more assets than they actually possess, especially if they are public figures. People in this category are easy targets for lawsuits and umbrella insurance can give them the additional coverage they might need at any time. Balancing insurance coverage with premiums costs is not easy. A common solution is to increase deductibles on another policy and use the reduced premium to purchase umbrella coverage. While this will cover any major liabilities, it could leave you vulnerable to paying for fender benders, small damages or loss out of your pocket. An insurance professional will be able to help you weigh the risks, costs and benefits.

An umbrella policy may be right for you, but you need to be sure before investing in it. The right way to make an informed decision is to contact your insurance agent to discuss your specific circumstances and the possible benefits of taking an umbrella policy.

The Lean New Reality Tarnishes Golden Years

The bad news: Many baby boomers are likely to get less money from Mom and Dad than they thought. The worse news: They may have to help their parents financially instead.

For years now, boomers have expected getting tremendous windfalls as their parents pass on. Many boomers, in fact, have been lagging in their savings and betting on big bequests, especially since many of them suffered big losses in 2008.

But for a growing number of boomers, things aren't going according to plan. The postwar generation is living longer and many are spending their savings along the way.

How much longer? Thanks to medical gains, a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85. For women, the odds are 71% and 53%, respectively. All of this has made the 85-and-over age bracket the fastest-growing segment of the population.

The result is that, as a group, boomers likely won't be getting as much of an inheritance as they hoped. Even worse, far from receiving a bequest, a growing number are tapping into their own savings to help their cash-strapped parents make ends meet.

For families, the result is often a lot of scrambling, dashed dreams, conflict and anger as parents and children try to come to grips with the lean new reality-and divide up a smaller pie.

Not surprisingly, many families are loath to discuss these issues. In addition to serving as a reminder of the older generation's mortality, a conversation about inheritance or Mom and Dad running out of money can provoke anxiety in parents. Many are uncomfortable disclosing the details of their finances in the first place, even more so when they're worried about disappointing their children.

Adult children, in turn, aren't eager to ask their parents about money for fear of coming across as greedy. Some feel guilty for thinking about their own financial needs at a time when parents could be facing steep medical or long-term-care expenses.

Nonetheless, financial advisers say, it is important for families to talk-if only to establish realistic expectations.

If parents anticipate running short of money-and if they and adult children are able to start a dialogue-there are several measures families can take. Among them: Have parents recalibrate their budgets, downsize to a smaller residence, buy an annuity or longevity insurance to lock in a lifelong income, or take out a reverse mortgage.

In situations where children have adequate financial resources, they can pay a parent's health-insurance premiums, purchase a long-term-care insurance policy for him or her, give a set amount of money each month or purchase the parent's home to generate cash for living expenses.

Before implementing any strategy however, talk with your financial and tax advisers.

If you are interested in learning more about long term care, disability, life, home and umbrella insurance, call Connie Prince at Allied Brokers. Connie is our in-house expert with 26 years of industry experience and strong relationships with major carriers such as Mercury, Travelers, CIG, Hartford AARP, Glenworth, Prudential and Banner.

Visit our website at http://www.alliedbrokers.com/ for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

A version of this article appeared in the June 11, 2012 edition of The Wall Street Journal, with the headline: Counting on an Inheritance? Count Again...

Protect Your Family Jewels

Does your homeowner’s policy automatically cover your jewelry and watches if they are stolen? Sure, up to $1,000- maximum. Is your engagement ring covered if the diamond falls out of the setting and is lost forever? Nope. The most common uncovered loss we see is theft of jewelry and watches.

Most people think that expensive personal possessions, such as jewelry, are covered under their general home owner’s insurance policy. The truth is that insurance companies set low limits on the kind of possessions they know will be expensive to replace, such as Rolexes, tennis bracelets, Super Bowl rings and your grandmother’s pearls.

So what do you do? Protect yourself by adding a jewelry rider to your home, condo or renters insurance policy. It’s a bargain- only $150 per year per $10,000 of coverage. One type is scheduled coverage, which lists each item individually with an appraisal, receipt or a prior insurance policy list. Or you can choose blanket coverage if you have numerous items of lesser value and don’t want to hassle with lists and appraisals.

Due to the volatility of silver, gold and diamond prices, it’s a good idea to have your most precious swag re-appraised every 5 to 7 years. We can recommend a jeweler who can do this for you inexpensively.

To find the right policy for your valuables, call Chris Falcon at Allied Brokers. Chris specializes in personal insurance lines such as home, auto, umbrella, fire and casualty. His in-depth knowledge and years of industry experience will help you protect the things you cannot afford to lose.Visit our website at http://www.alliedbrokers.com/ for information about all the types of  insurance we offer. Or call 1-888-505-7988 for a free rate quote.