What insurance do you need?

A: What are the legal requirements in your state? Basic automobile mandatory
B: How much risk are you willing to assume? Higher deductible is fine with me
C. What stage of life are you in? Eyes on the prize – early retirement here we come

Disclaimer: The following discussion is based on someone who currently works full-time, has a side hustle and no kids (me). I’m merely sharing my own experience here in hopes that it may help someone else.

Home & Car:
You are probably required to have car insurance in your state as a condition of owning a car. You can raise your deductible to lower your premium. Home/renter’s insurance may be required by your mortgage company or landlord. Unless you can afford to replace everything in the event of a catastrophe, buy home/renter’s insurance. Bundling auto and home may also give you more discounts. Consider adding an umbrella liability policy as you accumulate assets over the years.

Life & Disability:
Your employer probably offers a paid basic life insurance policy and paid long-term disability. You pay for short-term disability (STD) and any additional life insurance you want. STD comes in handy when you want to get a paycheck while you’re out for an extended covered absence (like maternity leave) and you don’t have a lot of sick days. With my employer, if you have 60+ sick days in your account, you can probably get away with the cheapest tier of STD coverage or perhaps you won’t need it at all. As far as life insurance is concerned, we have chosen to self-insure at this stage in our lives. If something were to happen to either one of us, the surviving spouse would be okay financially. That said, we carried term insurance when we had life insurance coverage.

Health (and employee benefits type) coverage:
During my last open enrollment, I ditched all coverage except medical, dental and legal for both of us. As I move from outside employment to self-employment/quasi-retirement, we’re whittling down the list of “essential” benefits-type insurance even more. When I do leave outside employment, my health insurance is the only benefit I will take with me. Why? Health insurance is a non-negotiable for us. End of discussion.

Dental insurance is great if you have it via an employer sponsored plan. Not so much if you are considering a private plan. Those plans often come with high premiums, limited coverage and even more limited dentist networks. My dentist confirmed this today. My existing dental coverage ends in late July if I choose to leave my job at then of my contract. I asked for a thorough evaluation at today’s visit for items that might need to be taken care of while I still have insurance. I appreciate my dentist’s honesty. There are 2-3 areas in my mouth that have been on her watch list for the past 18 months. She advised that I go ahead and address one area while I still have coverage. She also commented that self-pay patients typically spend less on dental care than the money we’d spend on a private dental plan over a 12 month period.

To me, legal coverage has been well worth the premiums paid. Wills & advance health care directives, real estate paperwork review, dispute letters, telephone advice for consumer type issues, etc. Any updates will get handled before departing.

Biz insurance:
I have a policy designed for my niche business. It costs me about $250.00 per year and provides the liability coverage needed for teaching classes, technical editing, making crafts/quilts and vending at fairs. I chose to assume the risk for sewing machines and other supplies/equipment that I use in the course of my business. If I had a permanent retail/office location or an expensive longarm machine, my needs would be very different.

As my business develops over the next 12-18 months, I may consider adding some of my own “employer paid” benefits to the mix – but only if it make cents (pun intended) to do so.

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