Over the past several months, we have examined nine protection areas of each person’s financial life. This is the Moat component to your wealth. If there are gaping holes in your protection component, it doesn’t matter how well your growth and savings do, because you and your family could possibly lose them if the protection component of your wealth is not properly in place. This month, we will review the nine components of protection and provide an overview of each. By doing this, we will have a review of what each component should have and discuss the general thoughts of having each component protected. The components are as follows: > Vehicle Insurance > Property Insurance > Liability Insurance > Disability Insurance > Medical Insurance > Government Plans > Wills and Documents > Trusts and Ownership > Life Insurance The first plan to discuss is Vehicle Insurance. It is most important to have enough liability, property damage and personal injury protection on your car insurance. You should review your policies with your agent at least annually to make sure that you have the proper amounts of coverage for your vehicles. You should also look at high deductibles; your rates go up based on the amount of claims that you submit, not necessarily the dollar amount of the claims. You want to avoid putting in small claim amounts. Next is Property Insurance. You want to make sure that you
have enough coverage to replace your property and enough liability coverage to protect you and your family if someone gets hurt on your property. It is important to have guaranteed replacement cost coverage to rebuild your property if it is destroyed. You should constantly update the amount needed and verify that it is enough with your insurance carrier. Liability Insurance should provide at least one times your net worth in liability coverage. You should consider a liability limit of at least $1 million for an umbrella policy. On Disability Insurance you should get as much as you can qualify for. If you work for a company and they have group disability, you should get the maximum and pay for it with after tax dollars or get taxed on the premium if that is an option. The reason for this is because the benefit is tax free. If you are purchasing a private disability plan, make sure that the definition of disability is one that says you are disabled if you cannot perform the substantial and material duties of your occupation, and one that has a cost of living option. Medical Insurance, make sure that you have coverage and if you have HSA coverage or MSA plans, make sure that your medical plan is eligible. Government Plans, make sure that you run your social security statement (www.ssi.gov) to verify that they are crediting you with the proper amount that you withheld. You can verify that by reviewing your W-2 and make sure that the amount of your social security wages that you paid social security taxes on were credited. There is a three-year time frame to correct any errors. In addition, if you should make sure that any government benefits that you pay into are verified so you can make sure that when you collect on them, the amounts that you are collecting on are verified. Wills and Documents, if you do not have a Will, Living Will, Durable Power of Attorney, Advanced Medical Directives you
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