Seeing to Your Other Insurance Needs
If you're able to lock in COBRA insurance for the next 18 months, you have one major insurance need taken care of, even if it is frighteningly expensive. But you want to think about your other insurance coverage as well, especially insurance that may have been covered by your employer and insurance that you may be tempted to let lapse while you're unemployed.
Employer-Sponsored Insurance
Your employer may have paid for life, disability, dental, and vision insurance, in addition to medical coverage. Of these, life insurance is the one that's most important to secure while you're unemployed.
Some people think of life insurance as a way to leave great wealth to their children or spouse upon their death, but for most people, life insurance is simply a way to help your family pay for funeral costs and get through a year or so without your income.
Many people, therefore, buy enough coverage to pay funeral expenses, pay off the mortgage, and pay for one or two months of income or unemployment benefits. Funeral expenses vary by area — call your local funeral home for an estimate.
You can find out your mortgage balance by calling your mortgage lender and asking for the payoff amount. Use WORKSHEET 12-1 to see how large your life-insurance policy should be.
Funeral expenses: |
$ |
Mortgage payoff: |
$ |
Monthly income or unemployment benefits: |
$ |
Other amount needed: |
$ |
Other amount needed: |
$ |
Other amount needed: |
$ |
Other amount needed: |
$ |
Other amount needed: |
$ |
Insurance You've Been Paying For
Your employer has probably had nothing to do with your homeowner's or apartment insurance and car insurance. When you're unemployed, you want to keep those insurance policies intact, although this is a good time to shop around for a better price and, if necessary, higher deductibles.
You may also have had a retirement plan at your company. For now, don't feel that you need to do anything with this plan, unless you think your company might be in danger of declaring bankruptcy. Otherwise, let it sit until you've had a chance to figure out your next move.
Most states won't allow you to let your auto insurance lapse (they'll eventually take away your license plates), and most lenders won't allow you to let your homeowner's insurance lapse (they'll cancel the mortgage and force you to sell your house).
Although this may seem intrusive on their part, consider what would happen if you had a fire in your house and didn't carry insurance. The mortgage company wouldn't have a house to sell in order to recoup their loan, so they would make you pay that loan in full immediately.
Don't let unemployment go from bad to worse by not maintaining some insurance coverage for your house and car.
