Not convinced with insurance

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car733
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Not convinced with insurance

Post by car733 » Sat Oct 13, 2018 9:45 am

I have been reading about insurance this week, but I am not convinced.

Here's my situation:
I am 32 years old, married, no kids, no car. I have a stable job with generous pay, and my wife is a Ph.D. student. We are paying for our mortgage without issues.

Insurance I already have:
- Short and long-term disability from my employer
- Basic employee life Insurance and accidental death and dismemberment (AD&D) Insurance from my employer
- Cheapest home insurance with state farm to satisfy mortgage requirements. 400usd annually.

Umbrella policy
I called state farm to get a quote for an umbrella policy. Since I don't have car insurance, and the umbrella policy requires it, I need to get non-owner car insurance. Total cost for the umbrella: 300usd for the non-owner + 200usd for the 1M umbrella.

As far as I understand, I would use the umbrella to protect our assets in case of a lawsuit. I see the point if you drive, but since I don't own a car, I can't find a reason why someone would sue me.
The only thing that makes me doubt is that it's cheap.

Term policy
My biggest worry was what would happen if I die. I sat my wife and asked her what would she do if I die. She had a good understanding of where our assets were, how to pay off the mortgage and who to go to. She is good with her finances.

My conclusion so far
No umbrella until we get a car.
No term until we get a kid.

What do you think?

jwhitaker
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Re: Not convinced with insurance

Post by jwhitaker » Sat Oct 13, 2018 10:03 am

Sounds fine to me. Most likely use of umbrella is due to bad car accident, so you are likely fine, unless you have a dog that likes biting children. Swimming pool on your property might also make me rethink but 500 annually is way too much. More likely to get struck by lightening probably.

Also agree with your life insurance reasoning. Insurance is to protect against risk. If it isn’t there you don’t need it.

sport
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Re: Not convinced with insurance

Post by sport » Sat Oct 13, 2018 10:18 am

One other thing to consider about life insurance is "insurability". If you are in good health now, you can buy a term insurance policy with very low premiums. If you decide to wait, your health might decline in the interim and insurance would become either more expensive, or unavailable to you. The chances of this are probably very small. However, term insurance is also inexpensive for young people, so you might want to buy some now to protect against becoming uninsurable. At your age, a few hundred dollars per year would be a sizeable policy.

RickBoglehead
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Re: Not convinced with insurance

Post by RickBoglehead » Sat Oct 13, 2018 10:22 am

I come to visit you at your house, and I trip/slip on the front walk and hit my head. I'm in the hospital for weeks, have brain damage, and spend my life in a rehab facility. My wife is going to go after your assets as well as you lifetime earnings to pay for my care.

That's why you carry more than the minimums on your homeowner policy and consider a liability umbrella policy.

TLC1957
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Re: Not convinced with insurance

Post by TLC1957 » Sat Oct 13, 2018 10:23 am

Cheapest home insurance with state farm to satisfy mortgage requirements. 400usd annually.


This line I have some concern if you put down a large down payment and you have a loss, the mortgage company will be happy but you may not. The amount of home insurance to buy is not what a mortgage company wants BUT what it would cost to replace the home and contents you should have 100% replacement cost for home and contents. Using your logic since I have no mortgage I do not need insurance. You may want to revisit this with your agent.

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whodidntante
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Re: Not convinced with insurance

Post by whodidntante » Sat Oct 13, 2018 10:25 am

I wouldn't pay $500 for an umbrella policy either. You might be able to get a better deal elsewhere. I like to have umbrella insurance sufficient to cover my investments. I only added a policy a couple of years ago. I expect it to be a waste of money, but if you need it, oh man is it good to have it!

TigerNest
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Re: Not convinced with insurance

Post by TigerNest » Sat Oct 13, 2018 10:29 am

Makes sense to me. We didn't get life insurance until we had a child. Life insurance quotes did get more expensive when I hit my mid-30s, so we went with a 20-year term instead of a 30-year term since we figure we shouldn't need the insurance by the time we're in our mid 50s, hopefully with a house paid off and college funds mostly funded.

We do keep a car insurance policies despite not owning a car. We drive every once in a while, borrowing our parents cars when we visit them, renting cars on vacation etc. that we felt it was worth the expense.

indecisive
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Re: Not convinced with insurance

Post by indecisive » Sat Oct 13, 2018 1:56 pm

Typically umbrella insurance requires you to have some other underlying policy with the company. I've seen cases where a company will require you to have auto insurance with them in order to sell you an umbrella policy (which is what you found), but I've also seen cases where a company will require you to have home insurance with them in order to sell you an umbrella policy. So, if you don't have a need for auto insurance, you could look into changing to a different home insurance company that would sell you an umbrella policy based on the fact that you have your home owners policy with them.

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dm200
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Re: Not convinced with insurance

Post by dm200 » Sat Oct 13, 2018 1:57 pm

If having child(ren) is likely, then I might consider a 30 year term policy now (with lower premiums) since you do not know if you would be insurable later.

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dm200
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Re: Not convinced with insurance

Post by dm200 » Sat Oct 13, 2018 1:59 pm

Homeowners with the insured value at about full replacement value - go with higher deductible.

Even a partial loss may not be fully paid with under insured replacement value. Consult your agent
Last edited by dm200 on Sat Oct 13, 2018 2:02 pm, edited 1 time in total.

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dm200
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Re: Not convinced with insurance

Post by dm200 » Sat Oct 13, 2018 2:01 pm

Basic employee life Insurance and accidental death and dismemberment (AD&D) Insurance from my employer
While slightly better than nothing, because this would not pay if you died of a heart attack, cancer, stroke, etc. - I would not even count this in my insurance evaluation.

quantAndHold
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Re: Not convinced with insurance

Post by quantAndHold » Sat Oct 13, 2018 2:16 pm

The purpose of insurance is to keep you from being wiped out if the worst happened. Life insurance, you probably don’t need yet. You and your wife can take care of yourselves should the worst happen. Homeowners and umbrella, though. I suspect, given the price of your policy, that you don’t have enough homeowners insurance. You should check with your agent.

Umbrella is doubly important for young people. Basically m the odds are low, but if the wrong thing happens, you can not only lose all of your current assets, but future earnings as well. Also, if you get sued, even if the suit is complete caca, the insurance company will provide the lawyer. If you don’t have insurance, you’re paying for the lawyer.

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Stinky
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Re: Not convinced with insurance

Post by Stinky » Sat Oct 13, 2018 4:03 pm

car733 wrote:
Sat Oct 13, 2018 9:45 am
my wife is a Ph.D. student. We are paying for our mortgage without issues.

Insurance I already have:
- Basic employee life Insurance and accidental death and dismemberment (AD&D) Insurance from my employer

Term policy
My biggest worry was what would happen if I die. I sat my wife and asked her what would she do if I die. She had a good understanding of where our assets were, how to pay off the mortgage and who to go to. She is good with her finances.
Does your wife have an income currently? Will she have a large enough income to carry the house if you’re not around?

I question whether you have enough life insurance now. Even without kids. You might scale the normal 10x salary back to something like 5x salary, reduced by the group life amount, and buy a 10 year term policy for that amount. It should be dirt cheap, but will protect your wife. You can reassess when you have kids and/or your wife moves into the workforce.
It's a GREAT day to be alive - Travis Tritt

Nate79
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Re: Not convinced with insurance

Post by Nate79 » Sat Oct 13, 2018 4:05 pm

So your transportation is exclusively walking or public transportation? Never driving a friends car, renting car or even riding a bicycle?

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car733
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Re: Not convinced with insurance

Post by car733 » Sun Oct 14, 2018 10:14 am

Thanks for the answers! Let me reply.
jwhitaker wrote:
Sat Oct 13, 2018 10:03 am
Swimming pool on your property might also make me rethink but 500 annually is way too much.
I don't have a swimming pool.
sport wrote:
Sat Oct 13, 2018 10:18 am
One other thing to consider about life insurance is "insurability".
That's a good point. Does having a kid increase the price?
Up to what age I should plan the term? 30 years would insurance me up to 62 years old.
RickBoglehead wrote:
Sat Oct 13, 2018 10:22 am
I come to visit you at your house, and I trip/slip on the front walk and hit my head. I'm in the hospital for weeks, have brain damage, and spend my life in a rehab facility. My wife is going to go after your assets as well as you lifetime earnings to pay for my care.
I didn't think of that possibility. Thanks!
Honestly, if that would happen, I guess 1M would not cover all the cost and you would get some of my assets as well.
TLC1957 wrote:
Sat Oct 13, 2018 10:23 am
This line I have some concern if you put down a large down payment and you have a loss, the mortgage company will be happy but you may not. The amount of home insurance to buy is not what a mortgage company wants BUT what it would cost to replace the home and contents you should have 100% replacement cost for home and contents. Using your logic since I have no mortgage I do not need insurance. You may want to revisit this with your agent.
As far I understand, the insurance covers the content, not the home itself. I might be wrong.
I moved too many times in my life and we don't have much. Everything is from Ikea and I doubt all content is higher than 20k.
I am not concerned at all with the content.
quantAndHold wrote:
Sat Oct 13, 2018 2:16 pm
the insurance company will provide the lawyer. If you don’t have insurance, you’re paying for the lawyer.
Very interesting. I didn't know that!
Stinky wrote:
Sat Oct 13, 2018 4:03 pm
Does your wife have an income currently? Will she have a large enough income to carry the house if you’re not around?
She has a stipend. Having a way to pay off the mortgage immediately and with our savings, she should be fine.
Nate79 wrote:
Sat Oct 13, 2018 4:05 pm
So your transportation is exclusively walking or public transportation? Never driving a friends car, renting car or even riding a bicycle?
We bike. You are thinking that's it's possible that I can get sued me being on a bicycle?
We would rent a car when going on vacations. 500 usd per year to increase insurance in a car rental when traveling sounds like too much :(

RudyS
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Re: Not convinced with insurance

Post by RudyS » Sun Oct 14, 2018 1:00 pm

I suggest you do more shopping for policies. Might be able to get better prices on the non-car owner policy and umbrella. Possibly if car and homeowners are from same company. I believe umbrella is good coverage to have.

seawolf21
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Re: Not convinced with insurance

Post by seawolf21 » Sun Oct 14, 2018 5:38 pm

car733 wrote:
Sun Oct 14, 2018 10:14 am
We bike. You are thinking that's it's possible that I can get sued me being on a bicycle?
Funny you should mention that. Just a couple of months ago, my friend's 7 year old kid was hit by a delivery guy on a bike. Nothing serious and unlikely to need an umbrella but I could see getting sued by someone looking for a payday.

smackboy1
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Re: Not convinced with insurance

Post by smackboy1 » Sun Oct 14, 2018 9:18 pm

For most people the primary purpose of insurance is to shift the risk of loss. It's especially useful if the risks covered are broad and the loss would be financially devastating. Insurance is like a safety net so don't confuse the unlikely with the impossible.

How much general liability coverage? A rule of thumb is to look at yourself from the POV of a plaintiff(s). Try to match your net worth. Liability insurance is a pot of easy $ to settle a case and make it go away without risking a costly trial and potential downside of big adverse judgment. They don't want to go after your house, portfolio, wages if they don't have to. So if your net worth is <$300K then around $250-500K coverage. Umbrella is cheap so use it to provide extra coverage as needed.

Cars, swimming pools, dogs, etc. are a common source of risk, but plaintiffs can be found everywhere. Random accidents can happen around you, slander and libel, slip and falls on your property, recreational sports accidents, your tree falls over, someone leaves your house after a party and get into a DUI accident etc..

Life insurance or disability replaces lost income. For example providing income if one or both persons become permanently disabled and unable to earn income but still have medical and living expenses. Or if one person dies and the other is disabled will the house have to be immediately sold?

Pregnancy and childbirth is not without risk. Consider purchasing life and disability insurance before conception. Physiological changes during pregnancy can complicate purchasing insurance. There may be a complication and the mother may be put on bed rest and ST disability can cover this. Many people are unaware that the US has the dubious distinction of having the worst rate of maternal death amongst developed nations.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

IowaFarmBoy
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Re: Not convinced with insurance

Post by IowaFarmBoy » Mon Oct 15, 2018 5:39 am

Here's something you might explore. When our kids were teens, the umbrella cost went up a lotso we put together an alternate plan. We raised our auto limits to $1M, bumped our homeowners liability to like $600k and added a rider to our homeowners that covered some of the additional personal liability risks that an umbrella covers. This was done with State Farm.

You might ask your agent about raising your homeowner's liability limit and adding the rider. This should have you pretty well covered assuming you never drive a car- either borrowed or rented. If you do either of these, you'll want a strategy to protect yourself. On a rental you can buy the liability coverage from the rental company. If borrowing a car, you would have whatever protection the owner of the car has, which may or may not be enough. Non-owner coverage may be your best option. Is that an annual or a six month premium? It doesn't sound so bad for a year, especially if you do drive somewhat.

jucor
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Re: Not convinced with insurance

Post by jucor » Mon Oct 15, 2018 6:43 am

car733 wrote:
Sun Oct 14, 2018 10:14 am
TLC1957 wrote:
Sat Oct 13, 2018 10:23 am
This line I have some concern if you put down a large down payment and you have a loss, the mortgage company will be happy but you may not. The amount of home insurance to buy is not what a mortgage company wants BUT what it would cost to replace the home and contents you should have 100% replacement cost for home and contents. Using your logic since I have no mortgage I do not need insurance. You may want to revisit this with your agent.
As far I understand, the insurance covers the content, not the home itself. I might be wrong.
I moved too many times in my life and we don't have much. Everything is from Ikea and I doubt all content is higher than 20k.
I am not concerned at all with the content.
Your understanding is incorrect. The mortgage company really does not care about your possessions -- they care about the house. Your homeowners policy covers the value (or at least most of it) of the house and your mortgage holder will be paid if it burns, gets blown away in a storm, etc. You are also covered for some amount of contents (likely at depreciated rather than replacement cost since you wanted the cheapest policy possible), and you have some amount of liability coverage as part of the homeowners policy as well.

I'm surprised you know so little about your coverage -- your policy documents spell out what is covered -- read them. They're available on State Farm's website or through your agent. Ask your agent to explain your coverage if you do not understand it.

right now you do not really know what you have -- it is impossible to make an informed decision with lack of accurate information.

smackboy1
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Re: Not convinced with insurance

Post by smackboy1 » Mon Oct 15, 2018 6:49 am

One more thing: consider non-owner uninsured/under insured motorist insurance. You might be able to never drive a car, but when bicycling you can't control if the driver that hits you has adequate insurance.
Last edited by smackboy1 on Mon Oct 15, 2018 8:09 am, edited 1 time in total.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

SimonJester
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Re: Not convinced with insurance

Post by SimonJester » Mon Oct 15, 2018 8:05 am

A few things to consider. Start looking into term life insurance now, as other have said the younger you are and the healthier you are the cheaper your premium will be.

Your wife should be looking into professional liability insurance once she is interacting with patients at any level. This is probably your biggest risk in the near term. My wife (RN) carried her own policy all the way through school and even since.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

ralph124cf
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Re: Not convinced with insurance

Post by ralph124cf » Mon Oct 15, 2018 8:32 am

The cheapest way to add additional liability insurance is to up your homeowners liability limits. You already have some amount of liability insurance thru your homeowners policy, upping the limits to $500k or so will be quite cheap.

Ralph

NextMil
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Re: Not convinced with insurance

Post by NextMil » Mon Oct 15, 2018 8:45 am

car733 wrote:
Sat Oct 13, 2018 9:45 am
I have a stable job with generous pay, and my wife is a Ph.D. student....

Total cost for the umbrella: 300usd for the non-owner + 200usd for the 1M umbrella.

What do you think?
Get cheap umbrella, get cheap term on both of you, and call it a day for the peace of mind. You make good money, and the cost is minimal to protect your 6, and its not going to make a big dent in your investing strategy. If I was really worried about it, I would get frugal in other areas.

donall
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Re: Not convinced with insurance

Post by donall » Mon Oct 15, 2018 8:51 am

ralph124cf wrote:
Mon Oct 15, 2018 8:32 am
The cheapest way to add additional liability insurance is to up your homeowners liability limits. You already have some amount of liability insurance thru your homeowners policy, upping the limits to $500k or so will be quite cheap.

Ralph
Absolutely raise liability on homeowners. We did this for a relative’s house after they gave up driving. It was very reasonable to raise liability limit from one to two million. Don’t remember the amount but it was much less than $500.

If you are in your thirties, just buy term insurance for both of you if you have any plans for a family. You can always cancel the insurance.

jwhitaker
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Re: Not convinced with insurance

Post by jwhitaker » Mon Oct 15, 2018 9:12 am

FYI while people can always cook up a scenario in which you get sued, and you can also cook up a scenario in which they will be sued for more than their current umbrella liability limit. The probability of all these events are below the level at which the human mind can discern. We all take risks somewhere. I work in insurance and am not against umbrella. In fact I once spoke with my neighbors (two incomes, two cars, two kids, one house) who had never heard of umbrella and I strongly advised them to buy. You are not in their situation however.

HEDGEFUNDIE
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Re: Not convinced with insurance

Post by HEDGEFUNDIE » Mon Oct 15, 2018 9:17 am

jwhitaker wrote:
Mon Oct 15, 2018 9:12 am
FYI while people can always cook up a scenario in which you get sued, and you can also cook up a scenario in which they will be sued for more than their current umbrella liability limit. The probability of all these events are below the level at which the human mind can discern. We all take risks somewhere. I work in insurance and am not against umbrella. In fact I once spoke with my neighbors (two incomes, two cars, two kids, one house) who had never heard of umbrella and I strongly advised them to buy. You are not in their situation however.
+1.

IMHO people on this board are way too conservative on insurance. I was once reprimanded by a BH for having the temerity to suggest that a single 20 year old with no dependents had no need for life insurance, because “you might get cancer tomorrow and then be uninsurable.” :confused With that logic should we be buying life insurance for infants as soon as they’re born?

Big Dog
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Re: Not convinced with insurance

Post by Big Dog » Mon Oct 15, 2018 9:25 am

IMHO people on this board are way too conservative on insurance. I was once reprimanded by a BH for having the temerity to suggest that a single 20 year old with no dependents had no need for life insurance,
Uh-oh, I have told my 20-something kids that exact same thing, (including one who just got married to a woman whose parent is a C-Exec at an insurance company that is typically pilloried on BH for their emphasis on whole life). Will I get kicked out of the BH sphere of influence? :annoyed

HEDGEFUNDIE
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Re: Not convinced with insurance

Post by HEDGEFUNDIE » Mon Oct 15, 2018 9:36 am

Big Dog wrote:
Mon Oct 15, 2018 9:25 am
IMHO people on this board are way too conservative on insurance. I was once reprimanded by a BH for having the temerity to suggest that a single 20 year old with no dependents had no need for life insurance,
Uh-oh, I have told my 20-something kids that exact same thing, (including one who just got married to a woman whose parent is a C-Exec at an insurance company that is typically pilloried on BH for their emphasis on whole life). Will I get kicked out of the BH sphere of influence? :annoyed
You would first be pilloried for not convincing your son to find a more worthy life partner.

:sharebeer

cherijoh
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Re: Not convinced with insurance

Post by cherijoh » Mon Oct 15, 2018 9:49 am

dm200 wrote:
Sat Oct 13, 2018 2:01 pm
Basic employee life Insurance and accidental death and dismemberment (AD&D) Insurance from my employer
While slightly better than nothing, because this would not pay if you died of a heart attack, cancer, stroke, etc. - I would not even count this in my insurance evaluation.
I think you misread the post. It sounds like employer is covering two policies - Life insurance and AD&D insurance. But OP is only taking the amount of insurance that is free to him.

My former employer covered 1x my salary with the option for me to buy more life insurance. As a single person with no dependents, I never did get additional life insurance. (I did have the maximum disability insurance through my employer).

Minty
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Re: Not convinced with insurance

Post by Minty » Mon Oct 15, 2018 10:18 am

Sorry if I missed it, but I didn't notice anything specific about income or assets, other than the income is "generous" and the savings are "fine." It is funny; the more assets OP has, the stronger the case for umbrella insurance to protect them. The more income OP has, the stronger the case for life insurance for a survivor. I think some sense of assets and income compared to expenses are necessary to give a sensible reaction.
Core Four with nominal bonds and TIPS.

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dm200
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Re: Not convinced with insurance

Post by dm200 » Mon Oct 15, 2018 10:44 am

cherijoh wrote:
Mon Oct 15, 2018 9:49 am
dm200 wrote:
Sat Oct 13, 2018 2:01 pm
Basic employee life Insurance and accidental death and dismemberment (AD&D) Insurance from my employer
While slightly better than nothing, because this would not pay if you died of a heart attack, cancer, stroke, etc. - I would not even count this in my insurance evaluation.
I think you misread the post. It sounds like employer is covering two policies - Life insurance and AD&D insurance. But OP is only taking the amount of insurance that is free to him.

My former employer covered 1x my salary with the option for me to buy more life insurance. As a single person with no dependents, I never did get additional life insurance. (I did have the maximum disability insurance through my employer).
No, I understood that the AD&D is free to the OP. My point is that such coverage is nearly worthless. It is worth something, possibly, and net small benefit if free.

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car733
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Re: Not convinced with insurance

Post by car733 » Mon Oct 15, 2018 11:35 am

smackboy1 wrote:
Sun Oct 14, 2018 9:18 pm
Pregnancy and childbirth is not without risk. Consider purchasing life and disability insurance before conception. Physiological changes during pregnancy can complicate purchasing insurance. There may be a complication and the mother may be put on bed rest and ST disability can cover this. Many people are unaware that the US has the dubious distinction of having the worst rate of maternal death amongst developed nations.
Good point. Thanks!
IowaFarmBoy wrote:
Mon Oct 15, 2018 5:39 am
Is that an annual or a six month premium? It doesn't sound so bad for a year, especially if you do drive somewhat.
Annual. Yes, the price is not an issue at all. I am just looking at my options.

jucor wrote:
Mon Oct 15, 2018 6:43 am
I'm surprised you know so little about your coverage -- your policy documents spell out what is covered -- read them. They're available on State Farm's website or through your agent. Ask your agent to explain your coverage if you do not understand it.
Fair point. I will read more.
NextMil wrote:
Mon Oct 15, 2018 8:45 am
Get cheap umbrella, get cheap term on both of you, and call it a day for the peace of mind. You make good money, and the cost is minimal to protect your 6, and its not going to make a big dent in your investing strategy. If I was really worried about it, I would get frugal in other areas.
Makes sense. Thanks!
jwhitaker wrote:
Mon Oct 15, 2018 9:12 am
FYI while people can always cook up a scenario in which you get sued, and you can also cook up a scenario in which they will be sued for more than their current umbrella liability limit.
Yep, 100%. After you decide on getting an umbrella comes the second question, for how much? Based on a conservative approach and how cheap it is, why not max it? Why not going 5x your net worth?
cherijoh wrote:
Mon Oct 15, 2018 9:49 am
I think you misread the post. It sounds like employer is covering two policies - Life insurance and AD&D insurance. But OP is only taking the amount of insurance that is free to him.

My former employer covered 1x my salary with the option for me to buy more life insurance. As a single person with no dependents, I never did get additional life insurance. (I did have the maximum disability insurance through my employer).
This is correct, I only have what comes for free. I like the idea of increasing disability insurance. Good tip!
Minty wrote:
Mon Oct 15, 2018 10:18 am
Sorry if I missed it, but I didn't notice anything specific about income or assets, other than the income is "generous" and the savings are "fine." It is funny; the more assets OP has, the stronger the case for umbrella insurance to protect them. The more income OP has, the stronger the case for life insurance for a survivor. I think some sense of assets and income compared to expenses are necessary to give a sensible reaction.
Maxing up all retirement accounts, close to 1M assets in taxable. I am doing more than fine.

I guess I don't fully see the picture of the more you have the more insurance you should get. I see our assets as the insurance itself. I think the increase in insurance should come from the number of dependents you have.
dm200 wrote:
Mon Oct 15, 2018 10:44 am
My point is that such coverage is nearly worthless. It is worth something, possibly, and net small benefit if free.
Can you explain this a bit more?
Thanks!

Thanks for all the replies, this is VERY useful.

Dottie57
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Re: Not convinced with insurance

Post by Dottie57 » Mon Oct 15, 2018 11:49 am

Umbrella insurance: I bought when assets over 1m and old enough to not be able to replace lost money.

Home insurance: replacement cost + a readable policy. Next year I will replace mine. Use an agent / broker who represents many companies.

Life insurance: get a small amount with a rider that guarantees you can up the amount without a medical exam.

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dm200
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Re: Not convinced with insurance

Post by dm200 » Mon Oct 15, 2018 11:58 am

dm200 wrote: ↑Mon Oct 15, 2018 10:44 am
My point is that such coverage is nearly worthless. It is worth something, possibly, and net small benefit if free.
Can you explain this a bit more?
Thanks!
OK. AD&D (Accidental Death and Dismemberment) Insurance only pays anything (for death) if you die from an accident. Only a small percentage of folks die that way. Therefore, while of some value, if you die of a heart attack, cancer, stroke, etc. - there is no benefit. if a person is un-insurable for life, then it may be better than no life insurance at all. Because of its very limited value (even if you get it free), I would not count it in my insurance regarding what I would need or want for coverage.

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car733
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Re: Not convinced with insurance

Post by car733 » Mon Oct 15, 2018 7:11 pm

dm200 wrote:
Mon Oct 15, 2018 11:58 am
OK. AD&D (Accidental Death and Dismemberment) Insurance only pays anything (for death) if you die from an accident. Only a small percentage of folks die that way. Therefore, while of some value, if you die of a heart attack, cancer, stroke, etc. - there is no benefit. if a person is un-insurable for life, then it may be better than no life insurance at all. Because of its very limited value (even if you get it free), I would not count it in my insurance regarding what I would need or want for coverage.
Thanks for the explanation.

randomguy
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Re: Not convinced with insurance

Post by randomguy » Mon Oct 15, 2018 7:34 pm

car733 wrote:
Sun Oct 14, 2018 10:14 am


We bike. You are thinking that's it's possible that I can get sued me being on a bicycle?
We would rent a car when going on vacations. 500 usd per year to increase insurance in a car rental when traveling sounds like too much :(
I remember this from a while back: https://www.runnersworld.com/news/a2085 ... th-runner/

You can get sued and lose for 350k when you are out running:) You can imagine (and a lot of them have happened) all sorts of crazy cases. What if you cause a car crash from your neglient cycling (i.e. you run a red light). What if you hit a kid? What if you are in a group ride and take out 6 people. What if you slander a restaurant in a yelp review? Or have a party and one of your guests drives drunk(very state specific with liability)? And so on. They are all very low probability events (even compared to the low probability of having an auto accident that goes over the basic policy limits) but getting hit with one can be financially fatal. If it is worth 500 bucks or not to some extent comes down to your financial situation. Making 500k/year. spend the 500 bucks. Making 25k? Skip it. In between? You got tough choices to make.

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Re: Not convinced with insurance

Post by OnTrack » Mon Oct 15, 2018 10:28 pm

car733 wrote:
Sat Oct 13, 2018 9:45 am
Total cost for the umbrella: 300usd for the non-owner + 200usd for the 1M umbrella.
At least part of the 300usd for non-owner would be offset by not having to buy rental car liability from the rental car company (probably ~$10/day).

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car733
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Re: Not convinced with insurance

Post by car733 » Tue Oct 16, 2018 8:22 am

OnTrack wrote:
Mon Oct 15, 2018 10:28 pm
At least part of the 300usd for non-owner would be offset by not having to buy rental car liability from the rental car company (probably ~$10/day).
That's a good point. I usually don't get the full coverage from the car company since I have the coverage provided by the chase sapphire reserve credit card.

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Re: Not convinced with insurance

Post by staythecourse » Tue Oct 16, 2018 8:40 am

jwhitaker wrote:
Mon Oct 15, 2018 9:12 am
FYI while people can always cook up a scenario in which you get sued, and you can also cook up a scenario in which they will be sued for more than their current umbrella liability limit. The probability of all these events are below the level at which the human mind can discern. We all take risks somewhere. I work in insurance and am not against umbrella. In fact I once spoke with my neighbors (two incomes, two cars, two kids, one house) who had never heard of umbrella and I strongly advised them to buy. You are not in their situation however.
Of course the probability of the event is low otherwise they rates wouldn't be low. Isn't that obvious? Or should be obvious? If I owned property I would absolutely get umbrella.

As I discussed an another thread the interesting thing is how folks think about risk. Who cares if the risk shows up 1 out of 1000 if the risk leads to a few thousand dollars. If the risk is 1 in 10,000 and the risk could be in your entire net worth that is a big deal. It is not FREQUENCY that solely determines risk but the MAGNITUDE Of damages if they occur.

If you have a house and can guarantee someone will not sue you beyond tho limits of your policy then best to get umbrella. There are FEW things in life you can eliminate and this is one of them.

Just because you own a home and it doesn't catch on fire doesn't make having home owners insurance a mistake.

Good luck.

p.s. Just having free legal counsel backed by a multi million dollar insurance company as part of the umbrella is worth the piece of mind keeping the MANY, MANY ambulance chasers away.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Not convinced with insurance

Post by Katietsu » Wed Oct 17, 2018 5:51 am

car733 wrote:
Tue Oct 16, 2018 8:22 am
OnTrack wrote:
Mon Oct 15, 2018 10:28 pm
At least part of the 300usd for non-owner would be offset by not having to buy rental car liability from the rental car company (probably ~$10/day).
That's a good point. I usually don't get the full coverage from the car company since I have the coverage provided by the chase sapphire reserve credit card.
You need to carefully consider your liability coverage when renting a car. “Full coverage” often just covers the rental car not liability for someone else’s damages. Rental car companies don’t seem to care about that. And the amount of liability coverage associated with the car itself varies tremendously between states. So, for instance, if you rented a car in my state, the rental car company only provides $30,000 in liability coverage as required by law. Some rental companies will allow you to purchase additional liability coverage for $10-$20 a day and some do not even offer it. Credit card coverage provides no liability coverage. You probably have a higher than average risk per mile driven at causing an accident since you so seldom drive. So, quite frankly, I do not consider it to be a particularly unlikely event that someone in your situation could suffer a significant financial loss From a run of the mill accident.

Do you know what coverage you have for liability when riding your bike? Yes, I have personally known several bike riders who had to make insurance claims because they were found liable for causing an accident. One person hit a pedestrian, one person had the driver of a parked car open a door and the bicyclist was found responsible for the damage when they ran into it, and one person caused a significant accident when a car had to swerve to avoid a bike that ran a light. Not saying you need an umbrella policy, but just that you should really understand your current coverage and exposures. Not worrying about liability is for those who have no net worth and limited potential for income or assets in the future.

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Bengineer
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Re: Not convinced with insurance

Post by Bengineer » Wed Oct 17, 2018 6:16 am

car733 wrote:
Mon Oct 15, 2018 11:35 am
...
Maxing up all retirement accounts, close to 1M assets in taxable. I am doing more than fine.

I guess I don't fully see the picture of the more you have the more insurance you should get. I see our assets as the insurance itself. I think the increase in insurance should come from the number of dependents you have.
...
I believe you're confusing the ability to self-insure something like your car breaking down or the TV dying with covering liability. Your $1M in taxable and your future earnings (i.e. what you would self-insure with) are what's at risk.

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car733
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Re: Not convinced with insurance

Post by car733 » Wed Oct 17, 2018 11:01 am

staythecourse wrote:
Tue Oct 16, 2018 8:40 am
As I discussed an another thread the interesting thing is how folks think about risk. Who cares if the risk shows up 1 out of 1000 if the risk leads to a few thousand dollars. If the risk is 1 in 10,000 and the risk could be in your entire net worth that is a big deal. It is not FREQUENCY that solely determines risk but the MAGNITUDE Of damages if they occur.
If the magnitude is your concern, wouldn't you go higher than 1M?
staythecourse wrote:
Tue Oct 16, 2018 8:40 am
p.s. Just having free legal counsel backed by a multi million dollar insurance company as part of the umbrella is worth the piece of mind keeping the MANY, MANY ambulance chasers away.
That's a good point!
Bengineer wrote:
Wed Oct 17, 2018 6:16 am
I believe you're confusing the ability to self-insure something like your car breaking down or the TV dying with covering liability. Your $1M in taxable and your future earnings (i.e. what you would self-insure with) are what's at risk.
I definitely need to read more. I see the liability part, but I still don't see a 1M umbrella as a life savior. What if the liability is above your insurance limit and your assets?

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Re: Not convinced with insurance

Post by beardsworth » Wed Oct 17, 2018 2:49 pm

car733 wrote:
Sat Oct 13, 2018 9:45 am
I have been reading about insurance this week, but I am not convinced. . . .

My conclusion so far . . .

No term until we get a kid.

What do you think?
OP, here's another Bogleheads thread-in-progress, providing one example of why it may be a good idea to start life insurance before you "get a kid" and while you won't have medically-based underwriting issues. Seeing that thread reminded me of yours.

Right now you can afford the insurance but don't think you "need" it yet. Some years from now you may decide that you need it, but your health circumstances, or your wife's if she would be an insured, may have changed and you'll have trouble qualifying for a policy at all.

viewtopic.php?f=2&t=261637

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dm200
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Re: Not convinced with insurance

Post by dm200 » Wed Oct 17, 2018 2:57 pm

beardsworth wrote:
Wed Oct 17, 2018 2:49 pm
car733 wrote:
Sat Oct 13, 2018 9:45 am
I have been reading about insurance this week, but I am not convinced. . . .
My conclusion so far . . .
No term until we get a kid.
What do you think?
OP, here's another Bogleheads thread-in-progress, providing one example of why it may be a good idea to start life insurance before you "get a kid" and while you won't have medically-based underwriting issues. Seeing that thread reminded me of yours.

Right now you can afford the insurance but don't think you "need" it yet. Some years from now you may decide that you need it, but your health circumstances, or your wife's if she would be an insured, may have changed and you'll have trouble qualifying for a policy at all.

viewtopic.php?f=2&t=261637
Yes - the older you are - even if same health - the more term costs.

If you have future health issues, your rates could go up (maybe a lot) OR be un-insurable.

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Re: Not convinced with insurance

Post by staythecourse » Wed Oct 17, 2018 6:03 pm

car733 wrote:
Wed Oct 17, 2018 11:01 am
staythecourse wrote:
Tue Oct 16, 2018 8:40 am
As I discussed an another thread the interesting thing is how folks think about risk. Who cares if the risk shows up 1 out of 1000 if the risk leads to a few thousand dollars. If the risk is 1 in 10,000 and the risk could be in your entire net worth that is a big deal. It is not FREQUENCY that solely determines risk but the MAGNITUDE Of damages if they occur.
If the magnitude is your concern, wouldn't you go higher than 1M?
staythecourse wrote:
Tue Oct 16, 2018 8:40 am

Correct. I would go as high as my liquid net worth. The delta in premiums are so small as they coverage limits increase.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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