We’ve written previously about the importance of periodically reviewing your life insurance. It’s especially important at various stages, such as changes in family status (such as when children come along), major career developments (a new business partner or a significant increase in income, for example), and even when approaching retirement (using accumulated cash value to increase income-producing assets or for reinvestment).
But if you’re in your 40s, it can be an especially important time to perform an inventory of not only your life insurance, but all your other risk management tools as well, including home and property coverage and especially health insurance. Perhaps most significantly, this can be the best time to consider the purchase of long-term care insurance (LTCI). Let’s take a look at some of the reasons.
Life insurance. In your 40s, you’ve likely hit your career stride and are entering your peak earning years. Is the coverage you purchased when your family was younger still adequate in the event that you—and your now-greater income—were taken away? There’s a good chance that you need additional coverage to reach the recommended 5 to 10 times your annual income. If the gap is particularly, wide, you may wish to consider a low-cost term policy to fund your family’s need in the event of your death.
Auto, property, and casualty. Depending on how long you’ve been in your home, you may need to reassess the adequacy of your homeowner’s policy. For example, in today’s real estate market, many residential properties have appreciated rapidly in value. That’s great for your net worth and equity, but if you had to replace your home because of a fire or natural disaster, you want to make sure your policy provides the necessary coverage. According to some estimates, two-thirds of the homes in the US are underinsured. You don’t want yours to be one of them. As for your auto coverage, it’s a good idea to periodically review your policy’s limits on personal injury and property damage. In the current environment of rising prices, both medical costs and repair/replacement of property are likely to be much higher than when your policy was originally purchased. Here again, you don’t want your coverage to fall short when you need it most.
Health insurance. With medical debt consistently ranking as one of the chief contributors to financial problems, this is another area where it pays to reassess on a regular basis. Especially in your 40s, which is the time when for many, responsibilities are at their highest—kids still at home, work concerns expanding, etc.—you don’t want out-of-pocket medical costs to blindside you. If you’re among those fortunate enough to have coverage through an employer plan, that’s great; just make sure you’re familiar with the benefits and limits. If you’re self-employed, it could be beneficial to do some comparison shopping at Healthcare.gov or one of the other online health insurance marketplaces.
Long-term care insurance. Retirement is coming, and at some point, 70% of Americans currently turning 65 will need assistance with one or more of the following: getting in and out of bed (mobility), personal hygiene, feeding, dressing, or continence. The problem is, many still don’t realize that paid assistance for these “activities of daily living” (ADLs) is not covered by Medicare. This is where long-term care insurance (LTCI) comes in. “But wait,” you say, “I’m only in my 40s. Why do I need to buy LTCI now?” It may seem like the distant future, but the fact is that the younger you are when you buy LTCI, the cheaper the premiums are—forever. And with in-home care running at the rate of nearly $50,000 per year and assisted living facilities costing between $90,000 and $100,000, the lower premiums available now could make LTCI a bargain for your future.
Empyrion Wealth Management is a fiduciary wealth and investment advisor specializing in helping family stewards and other investors plan carefully for a financially stable future. To learn why it’s so important to work with a fiduciary advisor who places clients’ best interests foremost, click here to read our whitepaper, “The Fiduciary Standard and the Individual Investor.”
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