Budgeting - Insurance

Try as you may, in America you can't get away from the need for insurance.  After all America has 75% of the world's attorneys, has 50,000 graduating lawyers in any year, and is blessed with 94% of the world's filed lawsuits.  And, as another gem, most of the members of the Legislature are lawyers, making laws, that only lawyers can interpret.  I will save the comments on "greatest country in the world" for later.

As a result of this tomfoolery, we need to have insurance.  This is a major category in our budget that needs to be accounted for.  Ready, lets do it.

First up, we look at insurance for the house.  That would be Homeowner's / Renters insurance (averaged per month).  Hopefully you have enough insurance for replacement costs.  That is always worth a review each year to make sure that the coverage amount is enough, along with the terms of the insurance, e.g. does it cover flood if you are in a flood area?

Don't forget insurance for automobiles and luxury items like boats, campers, RVs, and motorcycles.  Again look at replacement costs and figure what you are able to absorb if a disaster occurred.

Next we have life insurance.  This would include Group life, SGLI, term life, whole life, universal life, variable life, and annuity.  This might include items like Disability insurance in case you are disabled and cannot work again.  What about long term care in your later years?  Medical, Dental, and Vision insurance need to be considered.  We might include the Flexible Spending Accounts here as well if you are still employed.

Next we have Medicare Costs.  This would include costs for Parts A (no charge) and B and other subparts of Medicare insurance.  Include any additional for things like Medicare Advantage plans here.  Again these are tied to a monthly average basis.

Next we have Liability coverage like Umbrella insurance and liability insurance (like with a charge account).  Umbrella insurance is not for everyone.  It depends upon how much risk you are willing to take if you do something wrong and someone sues you over it.  If you cannot cover what your overall wealth is you may end up loosing everything and still having to pay out for years to someone whom you have wronged.  An umbrella policy will cover such things.  Worth looking into.