Rick Bloom, Money Matters Published 12:18 a.m. ET June 24, 2018
Rick Bloom(Photo: submitted)
Q: I am afresh afar and accept a brace of questions about insurance. I’m in my mid-40s, divorced, with no children. In the divorce, my ex-husband got the abode and I got about $150,000 in cash. As against to affairs a house, I am renting. My bacon added than covers all my expenses. Added than about $25,000 in cash, the blow of my money has been invested in a abiding advance portfolio geared for my retirement. I am additionally extenuative in my company’s 401(k) plan. I was approached by a acquaintance of a acquaintance who is a activity allowance abettor and he told me that I should buy activity allowance and he recommended eight times my annual salary. My antecedent acknowledgment was I don’t charge activity insurance, but I capital to get your opinion. Accession at my acclaim abutment recommended that I buy a renter’s allowance policy. Is this article that you would recommend? You should apperceive that back my bedmate got the abode in the divorce, I had to buy all new furniture.
A: I don’t accept that anybody needs activity insurance. Activity allowance is no altered than any added blazon of allowance in the actuality that it’s need-based. If I didn’t own a boat, there would be no acumen to accept baiter insurance. If I didn’t accept a car, I wouldn’t charge auto insurance. Allowance is need-based and is meant to awning a risk.
With activity insurance, the accident is not that you are activity to die — we all apperceive that eventually we will. The accident that activity allowance covers is if you die and don’t accept the banking assets to abutment those who are financially abased aloft you. Activity allowance would be bare for accession who is the sole aliment champ of the ancestors and who does not accept the banking assets aloft afterlife to abutment the family. In your accurate situation, area no one is financially abased aloft you, there is no acumen you would charge activity insurance. As far as I’m concerned, the abettor is alone attractive at what’s acceptable for their basal line, not yours.
Renter’s allowance is about article I would recommend. Renter’s allowance provides you aegis if for some acumen your claimed acreage is destroyed. A archetypal renter’s allowance action would awning such things as your furniture, computers, accouterment and added claimed possessions. The catechism you should ask yourself is, if there was a blaze at your home and it was absolutely destroyed it, would replacing your furniture, computers and added claimed items account you banking distress? If the acknowledgment is yes, again renter’s allowance is article you absolutely should consider.
Like all types of insurance, you should boutique around. You would be afraid how abundant ante alter aural companies. In accession to your acclaim union, which about has actual acceptable rates, it does pay for you to accept a aggressive bid from addition company. The money you save looks bigger in your abridged than it does anywhere else.
Rick Bloom is a fee-only banking adviser. His website is www.bloomassetmanagement.com. If you would like him to acknowledge to questions, email email@example.com.
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