Vanquishing Vulnerabilities

Investing in insurance may provide premium peace of mind in troubled times

A birthday is a good time to stop and take stock of one’s situation. How’s the body- The career- The relationships- And so on. Thinking of New Year’s Day as a collective birthday for the world, the start of 2009 is a particularly good time — what with the current economic bad tidings — to assess your protection. Or, rather, your insurance.

Sometimes insurance can mean knowing you’re in rich Aunt Hester’s will, or that you have all-wheel drive. It can even be bona fide insurance policies celebrities might purchase to insure career-making body parts. For most, however, it’s nothing so exotic. Insurance is, however, crucial and full of choices and variations.

”I sell 95 products — life, homeowners, liability, health, disability, annuity products,” says Sharon Eddy, an agent with State Farm Insurance in Alexandria, just getting warmed up. ”I do all kinds. I’ve had 21 years in this business.”

Where most people would likely begin, however, is with themselves and all those valuable organs and bones and such.

William J. McNamara, in D.C., specializes in health insurance. And his words of warning for a souring economy might help those who find themselves ”downsized” out of a job and, as is usually the case, out of health insurance. That’s where the federal COBRA law — shorthand for the Consolidated Omnibus Budget Reconciliation Act of 1985 — comes in handy. At least, that’s in the back of your head when the axe starts falling ever closer. But maybe your thoughts should be elsewhere.

”COBRA is for people who have serious, pre-existing conditions,” says McNamara. ”We’re talking about cancer, HIV, diabetes….”

So, while there are obviously plenty of people who will need to turn to that COBRA option, it’s an expensive one if you have no pre-existing conditions — the boogeyman of the American health care system.

Typically, an employer would be covering 75 percent of an employee’s health premium, leaving that employee to pick up a tab of, say, $150 per month. Laid off, that employee can turn to COBRA to continue his health insurance, but he or she will now pay the full premium — $600 for our hypothetical un-employee. McNamara promises that for a relatively healthy, relatively younger worker, that figure would likely come closer to $300 by foregoing COBRA and choosing an individual plan.

Another point to watch during an economic downturn, advises Eddy, has nothing to do with one’s body, and even little to do with you. Until the accident.

”Do you have enough ‘uninsured motorist’ coverage-” she suggests people ask themselves. ”There are more uninsured motorists driving when [economic] times are bad.” In other words, it may be illegal to drive without auto insurance, but that doesn’t mean the outlaw who just rear-ended you has any money to fix your car.

A specialty of Timothy Schaeffer, co-owner and agent at his family’s Schaeffer Insurance Services and with more than 25 years in the business, is insurance against identity theft.

”Some services just monitor your credit,” he says of the lower end of identity-theft protection. ”They’ll send you a letter, an alert for a large credit-card purchase. But some actually provide [insurance] coverage in case your bank didn’t make it go away, doing the laborious work of calling and reversing the damage. It takes a lot of work to correct your identity.”

Add it as a rider to a homeowner’s or renter’s policy, and it’s an added annual premium of only about $20. And during any time, in the money or out, the homeowner/renter policies are a must. A mortgage might dictate certain insurance coverage, but renters are generally left to their own devices. For those who haven’t got it already, it might be time to assess the necessity of renter’s insurance, which could cover a couple as well a single renter.

Look at fires, for example, says Schaeffer. An apartment complex catches fire and perhaps the Red Cross comes out and finds shelter for those displaced renters. But that need not be you.

”With a $20-a-month renter’s policy, your insurer will put you in a hotel, get you furnished housing,” he says. ”It’s quite a lot of coverage. You can’t insure for every single thing, but if you can get affordable insurance for major events — theft, fire, smoke damage, break-ins, identity theft — do the things that are cheap enough to do.”

In uncertain times, says Eddy, what you’re really paying for is not a new side panel on your car or compensation for your stolen bike or whatever else insurance may cover. What you’re paying for is an antidote for anxiety.

”That’s what we sell: peace of mind and a good night’s sleep. It’s protection.”

Follow Will O'Bryan on Twitter @wobryan.

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