Do you know you might be over-insured by insurance policies? Read our blog post to learn how you can make the best financial decisions while protecting yourself.
Listen to this Podcast
Are you over insured?
If you are considering the full picture of your financial health, it’s likely you have quite a few insurance policies. In addition to auto and homeowner or tenant insurance, you may have life and disability or critical illness insurance, and possibly creditor insurance and even pet insurance.
All of these premiums can add up to a large percentage of your income, especially if you have too much coverage. Are you overpaying on insurance? Let’s look at some general guidelines so you can get an idea of how much insurance you really need.
Life insurance
You should have a minimum of 10 times your annual income, and ideally 15 to 20 times your income. Here’s the reasoning, using some simplified numbers.
If you earn, say, $100,000 a year, at 10 times your income your policy would provide $1 million. Invested with earnings of 5% a year, that would give your family an income of $50,000. But with a policy for 20 times your income, or $2 million, that 5% in earnings would fully replace your $100,000 income.
Keep in mind that life insurance can also be used to pay down a mortgage, clear debts and cover final expenses, all of which help relieve the financial burden on your loved ones.
Disability insurance
A serious accident or critical illness that strikes during prime earning years can prevent you from working, causing significant financial disruption.
Long-term disability insurance provides a monthly income of up to 70% of your annual gross income if you’re unable to work due to an accident or critical illness. Some employers offer disability plans, but terms vary. Be sure to find out how much you would receive and how long the coverage lasts.
If you are covered for less than 70%, or if your workplace only offers short-term disability (or none at all), would you be able to pay your expenses while you recover? Remember that if all or part of the premiums are paid for by your employer, the benefit payments are taxable.
Too much? Or too little?
If you’re like many people, you may not even know how much coverage you have. Take a moment to dig out those policies. It’s quite likely that, instead of having too much coverage, you actually have too little. If that’s the case, then rather than overpaying, you’re putting yourself, your family, and your assets at risk.
If you’re concerned about the amount of insurance you have, book your complimentary 30-minute consultation session with our team! Insurance calculations must be based on individual circumstances, and our team can take a holistic view of your family and financial situation to recommend the amount of insurance that’s right for you.
We hope you enjoyed reading our blog post about being over insured! Check the full live chat here. You can find our live chats and more of the latest financial news on our News Blog. Stay tuned to learn more tips on a new topic each week on our Instagram Live at 5 on Instagram! Aside from our live chats, we post daily financial updates on social media! Follow us on Linkedin, Twitter and Facebook and Instagram.
More Financial News & Events
Living your best life: Striking the balance between enjoying life now or enjoying it later
Sep
Living Your Best Life: Client Testimonials and Insights
Sep
Unpacking FOMO: Understanding biases, emotions and financial attitudes
Aug
How to overcome FOMO to not overspend this summer
Aug
How to Overcome FOMO on Investments
Aug
What behaviours undermine your ability to build wealth
Jul
How Do You Loose Wealth
Jul
What Does Wealth Building Mean to Our Clients?
Jul
Estate Planning: What You Can Learn From the Mistakes of Celebrities
Jun
Estate Planning For Lawyers
Jun
Estate Planning for Business Owners
Jun
Managing growth for business owners
May
Are you a lawyer with questions on how to grow your investments?
May
Cultivating a growth mindset around money
May
Why financial growth can be deceptive
May
Home and Financial Document Organization
Apr
Business owners, it’s time to start spring cleaning.
Apr
Spring Cleaning Your Finances
Apr
Unique financial challenges female lawyers face
Mar
Taking Action: A Woman’s Perspective on Deciding To Tackle Her Finances
Mar
Is there a gap in your income protection?
Mar
Knowing the difference between Tax Filer and Tax Advisor
Mar
Conquering Women’s Fears Around Finances
Mar
Trends in Family Law
Feb
PART 2: Financial Conversations Couples Need To Have at Different Life Stages
Feb
Financial Conversations Couples Need To Have at Different Life Stages
Feb
Disruption and Reinvention: Starting a Second Career in your Forties
Jan
How to create a strong financial fortress during market downturns
Jan
Creating a Financial Vision Board for 2023
Jan
5 Tips to set yourself up For Financial Success in 2023
Jan
Year-end Donation strategies
Dec
Year-end tax planning
Dec
Getting clients organized for 2023
Combating Quiet Spending
Nov
Our Client’s Journey to Building Financial Confidence
Nov
How Working with an Advisor can Improve your Confidence
Nov
A letter from the CEO’s desk
Nov
Getting Psychologically Ready for Retirement
Oct
Retirement Planning for Business Owners
Oct
Top Issues Clients Face with Retirement
Oct
What Risk Means for your Investment Portfolio
Oct
Finding Investment Opportunities in the Market
Sep
Behind The Scenes On Helping Our Clients Choose Investments
Sep
How to Deal with Debts Amidst Rising Costs
Sep
Buying and Selling Homes as Prices Fall
Aug
Parenting and Back to School
Aug
Dealing with the high cost of living
Aug
Ask Team Jackie Porter Series – Financial Planning with Jin Lee
Aug
Budgeting for Home Renovations
Jul
Mental Health and Finances
Jul