Property and Liability Insurance - Coursework Example

Business Table of Contents Introduction 4 Property and Liability Insurance 4 Property Insurance 4 Liability Insurance 5 Auto Insurance 5 The Impact 5Healthcare and Disability Insurance 7 Healthcare Insurance 7 Disability Insurance 7 The Impact 8 Life Insurance and Estate Planning 8 Life Insurance 8 Estate Planning 8 The Impact 9 Retirement Planning 9 Conclusion 10 Introduction This report will be aided at providing the Goodberrys with a comprehensive plan which will help them realize their aspirations while keeping the uncertainties of life at bay through implementation of specific strategies. This report will emphasize the importance of the following interrelations Property and Liability Insurance – Lifestyle Assets Healthcare and Disability Insurance – Earning Capacity Life Insurance and Estate Planning – Dependants Retirement Planning – Leisure Years The Goodberrys will be provided with a blueprint of Personal Risk Management that will help them in preserving their current assets while creating sustainable future growth. Property and Liability Insurance Property Insurance Property/ Homeowners’ insurance should mandatorily protect against damages caused by the following: Fire/ lightening Smoke Aircraft Vehicles Rioting Broken glass Vandalism Additionally, it should also provide cover from natural calamities like flood, earthquake, etc. (Fisher & Shelly, 2003 P. 210 – 211). All the assets should be meticulously documented and the details should be periodically updated. Once done and preserved properly, this would serve as a proof and will be required for filing a claim (Tyson, 2006 P. 351). Liability Insurance Liability insurance provides financial cover against litigations arising out of instances wherein some outsider gets injured, through any means, on the owner’s property. Ideally, the amount of liability insurance should be twice the amount of financial assets. Extra cover being inexpensive, buying it doesn’t pose a burden (Tyson, 2006 P. 351). It provides dual coverage by protecting personal property and insuring against litigation. Auto Insurance Auto insurance is an expensive necessity. The mandatory liability – coverage insures against physical injury as well as damage to the automobile. The minimum cover for physical injury amounts to $ 25000 for an individual and $ 50000 for an accident. It is advisable that the policy should be duly verified prior to planning a trip and even lending the vehicle to someone else. Given the financial vulnerability that the Goodberrys, may run into in case of an accident – due to the fact that Mr. Goodberry is the lone earning member – the family must have auto insurance and also an additional coverage against uninsured motorists. This will cover the medical bills and loss of income if an injury is caused by any uninsured motorist (Fisher & Shelly, 2003 P. 208 – 210) The Impact These two types of insurance cover nearly all our material belongings provided we buy the policy that caters to our specific requirements. We should take the buying decision after a thorough analysis of their proneness to damage. Unnecessary expenses – which are often quite hefty – arising out of such situations and the legal hassles which often accompany them can be avoided through these insurance covers. This in turn contributes towards a sustainable financial growth through minimization of losses. Florida being mostly a coastal area, the Goodberrys should buy a property insurance policy which incorporates flood cover. This can be done when they actually buy a property in Florida. When it comes to auto insurance, they should go for a comparative analysis of the policies available in the market as rates differ greatly (Fisher & Shelly, 2003 P. 210). Factors they should keep in mind while buying such a cover are driving record and safety standards of the car. Poorer the driving records higher the rates are. The same principle applies for cars having poor safety standards. Hence, the vehicle should also be chosen with great care. Luxury cars and sedans obviously increase the insurance rates. Healthcare and Disability Insurance Healthcare Insurance Health insurance is an indispensable shock absorber that allays the financial pressure from off the people who have an encounter with an illness or an injury (Kapoor, Dlabay & Hughes, n.d. P. 339). The premium associated with different policies obviously differ on grounds of Diseases covered Health conditions of the insured individual Age while obtaining the policy Life – expectancy The more critical the constraints are the more expensive are the policies. The premium is worth paying because, during the event of serious medical emergency, the policies help waver off a bulk of the expenses which might be highly unaffordable, given the upward trend of medical complications as well as related expenses. Disability Insurance Unlike problems related to old age, disability is the temporary or permanent loss of working ability arising from certain conditions which can be either mental as well as physical. Disability insurance can’t be obtained unless one works. Moreover it’s comparatively costly. Considering the significance of the cover it provides, people having dependants should necessarily have disability insurance (Fisher & Shelly, 2003 P. 212). The Impact We would suggest Mr. Charles Goodberry to obtain a health insurance as a mandatory cover. For this he should obviously analyze the health conditions, complications (if any) and requirements of himself as well as those of his family members. We would also like to suggest him to have adequate disability insurance owing to the fact that, until Mrs. Alice Goodberry starts working, he is the sole earning member of the family. Moreover, their children are yet to reach the working age. Thinking practically, an event of his disability would be a hard blow for the entire family. These covers will help consolidate their financial health though they claim a considerable portion of the monthly disposable income in the form of premium. Life Insurance and Estate Planning Life Insurance The basic concept of life insurance is that it helps to protect the dependants after the demise of the insured individual (Kapoor, Dlabay & Hughes, n.d. P. 372). The proceeds from life insurance can be put to a variety of uses such as children’s education, debt repayment tool, etc. decision regarding obtaining a life insurance cover depends on and varies with individual needs. Due to obvious reasons a person having an unemployed wife and underage children as dependants should definitely obtain such a cover. Estate Planning In the course of estate planning, it should be noted that the estate should never be designated as the recipient of the life insurance. Such a step will invite litigation. Leaving the designation form empty has a similar outcome. “…The beneficiary of a life insurance policy should always be a named individual or a trust for that person’s benefit” (Palermo & Edelman, 2008 P. 210). The Impact Given the family setup of the Goodberrys, it is quite essential for Mr. Charles Goodberry to have a relevant life insurance cover. It will safe to suggest him the whole life insurance which, owing to the cash value, provides an additional savings account. When it comes to estate planning, it can be recommended that Mrs. Alice Goodberry or Candy Goodberry may be designated as the beneficiary and the inheritance rights of Andy Goodberry may be duly protected through necessary legal assistance. Retirement Planning The future plans of the Goodberrys will be manifested if they ardently enhance their income as well as savings. This can be achieved through religiously investing in equities, stocks of blue – chip companies and even gold. These avenues are obviously the safest for the rising middle class as they offset the risk that is associated with most of the investment alternatives. Since the junior Goodberrys are still underage and Mrs. Goodberry is still a non – earning housewife, it will be safe for to avoid investing in risky stocks and even derivatives and options. Mr. Goodberry has twenty years before retirement and there is a possibility that his wife will also start earning shortly. Therefore, Mr. Goodberry – even without being adventurous – will be able reap healthy financial benefits from monthly investments. As it goes without saying that investment is speculation that involves high levels of market analysis, market forecasting and a variable degree of risk, it is safe to suggest that Mr. Charles Goodberry should start gaining first hand knowledge about the process of investment in order to understand what will be best for him and his family after he retires. Following this, he will be required to seek expert consultation in order to fine tune his overall policy decision. Conclusion While envisioning our future journey, we generally factor in the unforeseen ‘bumps’. At the same time we remain uncertain about the probability of their occurrence. This is the primary reason behind the indecision that individuals suffer from when it comes to buying an insurance policy. In this particular case, the Goodberrys have aspirations befitting the up and rising middle class generation. Through proper planning, they can make their journey into the future a smooth experience. They also need to keep in mind about their children, who needs proper education and upbringing to foray into their future comfortably. They should have an overall insurance cover that will comprise property and liability insurance to protect the lifestyle assets, healthcare and disability insurance to protect the earning capacities, life insurance and estate planning to protect the dependents. The policies should be chosen on the basis of their niche requirements. Mr. Charles Goodberry should meticulously chalk out his retirement plan, keeping in mind the number of years he will still work and accordingly strategize his investment plans. References Fisher, Y. S. & Susan, S. (2003). The Complete Idiots Guide to Personal Finance in Your 20s and 30s. Alpha Books. Tyson, E. (2006). Personal Finance for Dummies. For Dummies. Kapoor, R. J., Dlabay, R. L. & Hughes, J. R. (No Date). Personal Finance 8E. Tata McGraw-Hill. Palermo, T. M. & Edelman, R. (2008). AARP Crash Course in Estate Planning: The Essential Guide to Wills, Trusts, and Your Personal Legacy. Sterling Publishing Company, Inc. Read More