Model house


Building a secure financial future involves smart planning and proactive strategies, and determining the types and amount of insurance you need is an important part of that planning process.

“The first step is to look for insurance companies that have demonstrated longevity and stability over time,” advises State Farm insurance agent Kathy Kilo Peterson. “Then consider the company’s combination of price and service. Your insurance agent should always be there when you need him or her.” Peterson recommends asking friends for referrals and checking with the Missouri Department of Insurance for any complaints about a specific company or agent.

Once you locate an agent to work with, an annual insurance check-up is a good idea, adds Robert Mahon of Farmers Insurance. “People see their dentist twice a year and get regular physicals, and you should schedule an annual review of your insurance, too,” he says. “By looking at your coverage and making sure it’s appropriate for your current financial situation, you’ll walk out of your agent’s office with peace of mind, and there won’t be any surprises if you do file a claim.”

However, Peterson notes that filing small claims is a common mistake. “Really assess your damage before deciding whether you want to file a claim,” she says. “Talk to your agent to make sure you’re making the best decision. Filing a claim that’s near the amount of your deductible can result in losing a claim-free discount or increase your premiums, for instance. Don’t treat your insurance like a maintenance policy.”

While Peterson suggests caution, she also recommends making sure that your most treasured valuables are adequately covered. Homeowners policies may limit reimbursements for specific types of property, such as jewelry and fine art. If you own high-value items, you should consider an insurance rider or supplemental policy.

Long-term care insurance is another important type of policy that many individuals overlook. Purchasing this type of insurance a decade or more before retirement can result in significantly better rates. “Considering those future needs is another part of determining the proper combination of policies, coverages and deductibles for your individual situation,” Peterson says.

Mahon notes that many people consider their home to be their most important asset. In fact, future earning potential should be the primary concern when determining adequate coverage. “You may insure your house, but if you are the subject of a lawsuit that results in a sizable judgment against you, your wages could be garnished, which is not a small inconvenience, but a major financial burden,” he says.

Fortunately, coverage can be increased by hundreds of thousands of dollars for only a minimal premium increase. Umbrella policies supplement homeowners insurance, and usually start at $1 million worth of additional liability coverage for less than $300 per year. These policies are especially important for high net-worth individuals and those who have potential hazards on their property, such as swimming pools.

“Insurance is a highly individualized product,” Mahon says. “Good insurance agents want to educate their clients and offer options. Like any other part of your financial planning process, we have to consider your budget and balance that with the most effective and appropriate allocation of your dollars. So talk to us. It’s in everyone’s best interest to get this right.”