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2006: A look back - A look ahead  
  A quiet 2006 produced record profits for insurers but a number of scenarios could trigger a disastrous 2007 with $100 million or more in claims.
 Insurance
 Personal finance calendar  Personal finance calendar 

Update your insurance coverage

The key to making sure you have enough coverage, Sloan says, is to take an honest assessment of your family's needs.

"Ask yourselves, what would happen to my family if my income went away. Look at your exposures. How do I replace that? How do I pay my outstanding debt? What about upcoming expenses? College?" he says.

Sloan says you should have enough insurance coverage so that if you invested the proceeds conservatively, your family would be able to survive by just using the interest.

According to the III, 2007 might be one of the best times in recent history to buy term life insurance. That's because falling mortality rates have driven down the cost for coverage, and industry experts are predicting that term life rates should fall by about 4 percent in 2007.

Long-term care insurance
Another insurance product many people don't want to think about is long-term care insurance, which offers protection by paying for custodial, or unskilled care if you become disabled and are unable to care for yourself.

"Can you feed yourself? Can you bathe? Any of us could need that at any time if we are in an accident," Sloan says. "But we typically start talking about that after age 50."

One of the largest markets for long-term care insurance is people worried they may be susceptible to Alzheimer's disease, or otherwise couldn't take care of themselves in their later years.

"As baby boomers get older, long-term care insurance is coming up on their radar," Sloan says. "A lot of them are having personal experience on how this can affect them through watching their parents age. Now they are thinking if that could happen to them, maybe I should look into it."

Sloan says that while most people have money set aside for retirement, if you have to spend that money for long-term care, your retirement could fall into jeopardy.

Health insurance
One of the first things Sloan discusses with his clients is health insurance. According to the U.S. Census Bureau, nearly 16 percent of Americans had no form of health insurance in 2005 -- some 48 million people.

The most affordable place to get health insurance, Sloan says, is through your employer. So, if you can get health insurance through your work, make sure you do. Unfortunately many employers offer no health insurance. If that is the case, there are still ways to make sure you are covered, Sloan says.

The first thing you need to do is to weigh whether you need a major medical policy or just a catastrophe policy that pays out if you are hospitalized and which normally is less expensive.

If you want to opt for a major medical policy, Sloan says one of the best deals around is a high deductible health plan coupled with a health savings account.

Keeping a high deductible ensures the monthly premiums will be lower. The health savings account is a tax-advantaged way of setting aside enough money to cover the premiums and deductible.

If your employer offers health insurance but you are not participating, Sloan says you should join as soon as possible. Unfortunately most policies only allow you to join once or twice a year during a period called "open enrollment." The timing for open enrollment differs by plan, but most policies allow you to join effective the first of the year, with the sign-up period falling in November or December.

Disability insurance
Once you have your life and health insurance in place, Sloan says the next place he advises his customers to consider coverage is disability insurance.

Disability insurance covers you in the event you become injured or ill and are no longer able to work. Long-term disability insurance typically pays a percentage of your income, typically 66 percent, until you are able to begin working again.

The thing to remember about long-term disability insurance is that, unlike most insurance policies, it is usually best to pay long-term disability premiums with after-tax money. Doing this will mean that the payouts you receive will be tax free.

"You don't want to be stuck paying tax on top of being strapped with a disability," Sloan says.

Bring an umbrella
The final policy type Sloan recommends his clients consider is a personal liability, or umbrella policy.

This is an overarching policy that will protect you if you are sued or otherwise liable for damages that exceed the limits of your homeowners or auto policies.

"If you are sued for $1 million, but you only have $100,000 in coverage, that won't go very far," Sloan says.

Sloan recommends his clients carry at least $2 million in total liability coverage.

Michael Giusti is a freelance writer based in New Orleans.

-- Posted: Nov. 1, 2006
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