So many people focus on earning and saving money for the future, but another factor to consider is protecting your money and the future that you are building toward. Simply put, insurance should be part of your personal financial plan. Contact your insurance agency to make sure you have proper coverage.
Insurance is typically thought of planning for the unexpected.
For example, automotive insurance is typically thought of as a protection for covering all things related to the vehicle. When an accident occurs, there are costs for repairing the vehicle and covering a car rental. Not all auto insurances policies are the same. Auto insurance policies vary in their level of coverage.
With car insurance, there is an aspect that’s often overlooked: does your car insurance protect your future wages and assets, meaning your retirement savings? It’s a concern that should be at the top of your mental list.
How Does Car Insurance Affect Your Personal Retirement and Finances?
Picture this: you have worked hard and saved money throughout your life. When your retirement comes, you’re ready to enjoy it. But one day as you’re out for a drive, you get in an accident. The collision causes serious bodily injury to another person. As a result, you’re facing a liability. Automotive insurance typically has a liability limit, meaning it will only cover up to a certain amount. For anything that exceeds that amount, you’re on the hook. An accident can result in $1 million or more in damages.
That’s when one accident could ruin your retirement saving. If you get sued for liability related to the accident, your retirement funds, investments, savings and future earnings are at risk. A judge could allow garnishment of your wages to pay the settlement. Some states have laws that protect your retirement savings like an IRA account from creditors, but if you live in a state that doesn’t protect your IRA from creditors, all your savings and earnings in that IRA may go toward paying the liability. That’s why your car insurance must be considered part of your financial planning.
How Does Umbrella Insurance Protect Your Financial Future?
The first thing to look at when it comes to adequate car insurance is the liability coverage. Your local insurance agency can help you with identifying the coverage you need. While you may elect to buy auto insurance with the best coverage, but it still will have a maximum liability payout.
When you started your first job after college, you started buying insurance for your basic needs, like a car or renter’s insurance. Then you bought a home and had your growing family, so you bought home insurance and life insurance. Think you’re covered for the rest of your life? That’s where personal umbrella insurance comes in. It’s coverage beyond your basic insurance in the event when a serious accident occurs. Umbrella insurance typically covers $1 million or $2 million above your home or auto insurance coverage. In the event of a major car accident where the liability exceeds the maximum payout, coverage from umbrella insurance kicks in.
Typical umbrella insurance can cost $200 annually for coverage of up to $1 million. If it sounds a little bit out of your price range, weigh that cost against the assurance of protecting your hard work and savings and gaining a peace of mind.