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Insurance: Who Needs it?

What type of insurance makes sense for you?

Evalue sus seguros

— Jacques Laurent/Wave/Corbis

Umbrella Insurance

It’s called umbrella insurance because it covers the kind of litigious rain that may soak you despite the protection afforded by your homeowners and auto policies. We’re talking about comprehensive personal liability insurance. Say you’re sued for slander or defamation of character. Or you accidentally plow your car into a shiny limousine and find that your auto policy just won’t cover the enormous damages.

Umbrella insurance supplements your other policies and kicks in only when their limits are exhausted. It isn’t terribly expensive—perhaps $250 a year for a million dollars of added coverage—and it’s a good idea for anyone with substantial unprotected assets, Pareto says. Generally $1 million is the minimum coverage for an umbrella policy. But if you’re very rich and very nervous, you can get coverage up to many millions. Umbrella insurance will not cover professional liability, only personal.

Cancer & Heart Disease/Stroke Insurance

Yes, you can buy cancer insurance. You can buy heart disease/stroke insurance, too. There’s nothing wrong with such plans, but be aware of their limitations, says Leonor McCall-Rodriguez, president and founder of One Voice Insurance Services in Redondo Beach, California. “These plans generally pay you a certain chunk of cash, up to thousands of dollars, should you be diagnosed with a specific disease and need treatment. They are not health insurance and can’t take the place of comprehensive coverage,” she says.

Such policies never cover pre-existing cancer or heart disease. And some policies will deny coverage if you are later found to have had the disease at the time of purchase— even if you weren’t aware that you had it. Premiums will vary according to your age, state, health history, and whether or not you smoke.

Always consult with a professional to determine what insurance plans and/or investments are appropriate for you.

Final note: Always consult with a professional when considering insurance. In addition, you can check the financial health of an insurance company by contacting your state insurance department or by using the financial information tools on the National Association of Insurance Commissioners (NAIC) website.

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