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How I handle my insurance …

This post is a quick continuation of the previous post on insurance, as someone asked how I handle my personal insurance needs.  My philosophy is to self-insure the small losses, and put the premium savings into higher coverage. As such, I carry larger deductibles than most subsidized policies, but still get reasonable rates.

Since I am approaching the right age for Social Security/Medicare, I am currently reviewing all my insurance. I’m not on Medicare yet, but have just started to look into the myriad of supplemental plans and options. Oh, it is great fun being a “boomer.”

Health Insurance Individual policy from a major health carrier for my wife and me, with a major medical rider. We have a moderately high deductible, and we do not carry dental insurance. As such, we self-insure the first several thousand dollars, but may save even more in reduced premiums. When we become eligible for Medicare, we’ll switch with the appropriate supplemental policies.

Life InsuranceTwo term policies. The first is through my professional organization, and the second is a personal policy. Incidentally, the professional organization policy is much cheaper. I elected to have two policies as a backup, in case the professional organization coverage changed.

Disability Insurance Long Term Disability from my professional organization, with reasonable rates due to a six month waiting period. No Short Term Disability policy – I self insure for that.  I recently dropped the disability policy, as I am now eligible for early social security. As such, should I become disabled, I would simple retire early and start collecting  social security.

Liability Insurance — I carry General Business Liability through a broker. The annual cost is reasonable, and often required by clients. I do not carry Errors and Omissions insurance, since there is low potential liability in my particular business. If I felt I needed it, it is available from my professional organization. Finally, on my lawyer’s advice, I do business as a corporation. (You should review your liability concerns with your attorney.)

Other business insurance — I have a rider on my homeowner’s policy that covers computers and other office equipment used in my home, as these are exempt from my standard policy. I also have a blanket umbrella policy on the home/auto policies.

My goal is to self insure the small risks my self, and insure for the larger but less likely risks. If I never personally collect any money from an insurance company, that is fine with me.  Not collecting means I have been lucky enough to avoid some pretty serious problems. (Even life insurance — that is there for my dependents, not me.)

But don’t depend on luck — as a business person, you need to manage risks!

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