Healthy Financial Habits: Insurance
Ready to start a budget but don't know where to begin? Candice talks about the different types of insurance and why they matter.
Hey, you. Good morning. It's Thursday, it's 10 am. You know what time it is – it's Coffee Chats with Candice. So grab your cup of coffee or beverage of your choice, no judgement here, and that includes your finances, and let's chat about “Insurance.”
For those who don't know me, my name is Candice Montgomery. I'm the founder of “Monetize Your Dream” a course for new and aspiring women entrepreneurs, to master business basics. And “Beginner's Guide to Budgeting.” I help everyday people like you learn how to budget so that they can pay off their debt, save money, and experience financial confidence. If you're new to me, my name is Candice, and I own three businesses with my husband. The first one we started in 1996 and is now in its 27th year. We've paid off over $450,000 in 7 years. And since 2022, we have been completely debt-free in our personal and in our business lives. I'm passionate about business and budgeting and sharing that with you.
Significance of Various Insurance Types
We're talking about insurance, and there's so many types of insurance. First one is homeowners' insurance. Whenever you purchase a house, you have to have homeowners' insurance, because you know what, unless you pay cash for your house, you don't own it. If something were to happen to it, then you need the homeowner's insurance to be able to rebuild, and also take care of any things that may go wrong, like if you have major damage from a storm or something like that, or God forbid that you your house burns down.
The next thing is rental insurance. You may or may not know, that your landlord or the apartment complex or whomever you're paying your rental to, your rental home or your rental apartment, your landlord cannot pay for your damages or your loss – you have to pay for that; you're responsible for that. So, they can pay for it, and they have to have landlord insurance, so they pay for the structure and being able to get it back to where it needs to be, but you have to pay for your belongings on the inside. It's very important that you make sure to have rental insurance and it doesn't cost a lot. You can check it out. If you have a theft or anything like that, you're protected and you're not out too much.
Auto insurance is the next one. I guess I could kind of talk both about personal and business in this one. So same thing with rental insurance, if you own a rental property, then you would want to have the landlord's insurance. So, auto insurance, commercial auto, and personal auto, too many people don't have enough coverage. If you own a, I'm gonna say, a Toyota Corolla, and it is not completely paid for, you have to have full coverage insurance because that's the requirement because you don't own the vehicle, the finance company owns it; whomever you may finance it through. You have to have full coverage so that they can be reimbursed for the cost of the vehicle if it's totaled. And then if you were in an accident, and say you hit a Lamborghini or even a Cadillac... you have the lowest limits of insurance, then most likely your insurance is not going to cover the damage to your car and also the damage to the other party's car, because you have to have more. You have to have higher limits of coverage, and when I say that some will be like 100/300/100. And if I'm talking French to you, don't worry, it's the coverages of the insurance, or 300/500/300, you want to make sure that you talk to your insurance provider, your agent, and talk to them about what coverages you need to have because you want to make sure that you're not underinsured. And that's what a lot of people have, is that they're underinsured because they don't want to pay a high premium.
Here are ways to get around that. When you fully build up your emergency fund, then you can increase your deductible, so that you can have a lower monthly premium. Whenever you do a lower monthly premium, then it makes it more affordable, of course, and so your emergency fund can actually cover that deductible, and then you don't have to panic about it, because you're like, “Oh my gosh, I can't afford a $2,500 deductible or a $5,000 deductible!” Well, that is what your emergency fund comes in handy for – it's there so that you don't have to worry about that emergency, and then you pay that back the emergency fund so that you can have it ready for the next rainy day.
The next type of insurance, umbrella insurance. With umbrella insurance, it's basically like what it says – it covers over a year. It covers over your house and your auto. There's commercial umbrella, and there's personal umbrella. And what umbrella insurance is for is whatever your homeowner's insurance, I don't know if you can get it if you're a renter probably can, but don't quote me on that, I would check with the insurance agent. But definitely on a homeowner's and an auto. If you have exceeded the amount that you're able to do on your homeowners in your auto, then your umbrella would cover over that. For example, like I was saying, if you ran into a Lamborghini or a Cadillac or something like that's an extremely expensive car, your insurance doesn't cover it, then your umbrella insurance would kick in, and that would cover that. If you don't have that, I would expect the lawsuit from whoever you were in an accident with if it was your fault. Hopefully, that's clear and I didn't confuse you on that.
The next thing is long term health care insurance. I'm going through that right now with my mom. My mom has Alzheimer's, and luckily, my mom was proactive and smart enough to purchase a long term health care insurance policy years ago because even though it took me about a year and a half to fight with them to get them to finally pay, they do pay her monthly expenses there at the community that she's at, so that she can be in a safe environment and be taken care of. Then I can continue to work and do the things that I need to do, because if my mom didn't have long term health care insurance, then she would have to live with us, or we would have to be paying for it. Just to give you an idea, it's like five grand a month, and that's average. A state-run facility, if you know when you don't probably want that for your loved one or yourself, when you're thinking about that, that's something that you wouldn't get until you're 60. That's when you start paying for that, you don't need to pay for it before then. But because if I had to, if I had to care for my mom and my home, I would not be able to work. I would not be able to to do anything because she needs 24-hour care, and so that's very important to consider for in the future. It's not expensive, it really isn't, so definitely check that out.
Next thing is disability insurance. There's long term and there's short term disability. When you have disability insurance, and if you're injured, say at home, you fell in the yard doing something and you broke your ankle. If you're not able to work, then your disability insurance will kick in and we'll give you the income to be able to help you for the income that you're not able to get from work. For example, short term disability, I think it usually takes like three months before it kicks in. That kind of tying back to the emergency fund, when you want your fully funded emergency fund is three to six months of expenses, that's what you have it for when something like that would happen, or the loss of a job, something like that. Long term disability is longer, it covers longer a certain number of years. Something to check online, you can check on that through your work, you can check on that separately through your insurance agent, or you can do some research on your own about that.
So that was just a quick overview, and I'm sure that I missed something from my previous recordings. Hopefully, I got the information that is important out, and that was valuable to us. If you have any questions, you can let me know. When it comes to budgeting, I've been where you are, I know how you feel. I know it's confusing, and you think that you're never going to be able to get your finances in order, but I can help you. If you or someone you know needs help. I do one-on-one coaching, and I can help you out with any issues. And if I can't, then I can certainly refer you to someone who can. I don't know everything, and no one knows everything. But after seven years of working on our budget, and getting out of debt, and seeing people struggle with their money in there, especially right now with the way the economy is and with inflation, people are really struggling. I realized that the big disconnect is how you put together a budget that works for you, and I've decided that I'm going to be teaching this exact process for getting out of debt, and creating a budget so that you can experience financial confidence as well. If that's something that you're interested in, send me a DM, let us know, we'll send you the link to get on our waitlist for the next time that we released the budget workshop, and you can join in. If you found this information valuable, please share, like or comment with others so that we can get more views on our on our video, and I can get my message out.
I thank you so much for watching and spending your time with me this morning, and I hope you've enjoyed your coffee or your little umbrella drink, and I look forward to seeing you next week, where I will see you Thursday at 10am. Actually check, check, check, check – I will not be here next Thursday, because I have to be out for the day. So I don't think that I will be here. If I can, I will but most likely will not be here for that day. I will see you the following Thursday at 10am for Coffee Chats with Candice, and something new is going on with the background, so if you want to see what's happening, make sure to join me next week or the week after! All right, well, have a great day. Have a great weekend and I look forward to seeing you in the next video.