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 Insurance — Two 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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