Such moves bring “an array of new options and decisions with respect to insurance,” USAA certified financial planner JJ Montanaro said. “The key is to understand what’s available and how it integrates into your existing insurance package,” Montanaro said.
Childers and her husband, Patrick Comia, “have spent the time and research to get that done,” Montanaro said.
The two live in Hawaii and will move to Texas, where she will start a new job. They own a home in Washington state and plan to keep it.
Not too long ago, they added earthquake and flood coverage for their Washington house. “I feel like we’re in a pretty good spot with insurance,” Childers said.
Indeed, Montanaro said, Childers and Comia have done a great job of putting together a comprehensive package of insurance covering their property, everything from valuable personal property to protecting their home in the event of an earthquake or flood.
“I’m not sure that I’ve had an initial conversation with a couple that have really gone the extra distance in terms of protecting their property like you have,” he told the couple.
But he did have a few suggestions for future considerations about life insurance and liability protections, especially as their assets and incomes grow and if their family grows.
Life insurance: One key change usually triggered when leaving the military is the need to replace Servicemembers’ Group Life Insurance with another policy. In Childers’ case, that’s not necessary, because she will continue to serve in the Navy Reserve, so she can keep that coverage. Comia, a medically retired Marine who is a government employee, has $100,000 in life insurance coverage through the Family SGLI program.
Childers also will have life insurance through her new job. “We made a conscious decision to limit our life insurance to SGLI and the new company,” she said. “We have no kids, and we figure the other person could take care of [himself or herself] financially if something happened.”
While that logic is not unreasonable, Montanaro said, he suggests reviewing those needs periodically whenever there is a significant change, such as children or a new house. Also, term insurance coverage is relatively inexpensive, and there are several good insurance calculators the two could use to determine if their insurance coverage is adequate.
Childers said they will review their insurance periodically to see if they need to increase the coverage based on life events.
Liability: Their property insurance policies provide liability protection. For example, they have $300,000 of liability coverage on their Washington house, a rental property. This coverage is protection in case they’re found liable for some incident that happens on their property or in conjunction with their auto.
“This is one area where you could build a bigger wall between your assets and future income and a potential lawsuit,” Montanaro told them.
If an incident happened, they could risk losing their assets because of a lawsuit. Montanaro noted that a personal umbrella policy can provide backup liability coverage to their existing policies for auto, home and renters. Typically, he said, a $1 million personal umbrella policy costs about $250 a year.
“It’s important that your liability coverage keeps pace with your financial growth as a couple. Someone just starting may have less need for this type of coverage than those with significant assets and income or potential income,” Montanaro said.
Childers said she and her husband have decided they probably don’t need more liability protection right now. “But if there are salary increases and our assets increase, we should probably look at” increasing that coverage, she acknowledged.
Homeowners: “A lot of people don’t understand that earthquake and flood coverage is not a part of normal coverage for homeowners,” Montanaro said. “You guys have gone the extra distance and obtained that coverage for your Washington rental property.”
Auto insurance: Montanaro suggested the couple increase their property damage coverage on their auto policy from $50,000 to $100,000, to cover losses if they damaged someone else’s vehicle or property with their car.
“That’s a relatively small amount of coverage given today’s auto prices and values. You would be at risk for damages to property above that amount,” he said, noting they could bump up their coverage to $100,000 for just a few dollars a month.
Childers said they will increase their coverage when they switch to a Texas policy.
Vision/dental/disability: These are examples of coverage that make sense to obtain through Childers’ new employer, Montanaro said. Although the employer will provide short-term disability coverage, Childers should consider electing long-term disability coverage, too. “I would encourage you to consider adding this coverage as you enroll,” Montanaro said. “It’s important to protect your income stream.”
Traumatic SGLI: Coverage of up to $100,000 for severe traumatic injuries, such as loss of sight, loss of hearing, loss of limbs. Injuries that occur off-duty qualify as well, such as injuries from car and lawn-mowing accidents. Traumatic SGLI is part of SGLI coverage.
