Insured or Unsure?

Choosing the right insurance is not a “one-and-done” deal. Here’s how to decide what you need – and when.
 


By Jill Vejnoska

When the 7-year-old son of iVillage president Deborah Fine was diagnosed with type 1 juvenile diabetes three years ago, Fine entered a world of doctors, insulin injections and play-dates where other moms had to be trained to give Jake an emergency shot.


But she didn’t have to worry about Jake’s ability to get life insurance in the future. One year earlier, she and her husband had purchased whole life policies for both of their sons as a gift of financial security later in life. Jake’s policy guarantees that he can incrementally increase his coverage, without having to undergo a physical, by a total of $700,000 beginning at age 22. Fine’s willingness to take the wheel – proactively adjusting her family’s insurance coverage to keep pace with life changes – provided protection for an unanticipated crisis. “It was an incredible safety net,” she says.


Understanding and prioritizing insurance needs can be complicated and, let’s face it, not the most exciting or pleasant topic to consider. But proper insurance coverage is increasingly critical as the ranks of high-level professional women expand. Women are the primary earners in 33 percent of all marriages now and accounted for 70 percent of all new business startups in the last decade, says Maria Umbach, Guardian Life vice president and chief marketing officer for individual markets. As a woman’s earning power and standard of living rise over time, so does the need to protect them. “Insurance planning is not one of those things where you’re ‘one and done,'” Umbach says. “It’s a work in progress.”

A Moving Target

And that’s where things get tricky. Experts say no two women’s insurance needs will be the same – or remain fixed for very long. While there are certain must-haves – health, life, disability and, ultimately, long-term care coverage – the way women must balance and allocate their insurance dollars over time can be like trying to hit a moving target.

Susan Waring, executive vice president and chief administrative officer for State Farm, recommends having life insurance worth 10 times one’s annual income as a general rule. But a younger single woman usually needs less life insurance than a mother with dependents, and both probably need more disability coverage than an older woman, who may have adult children, a paid-off mortgage and substantial savings. Meanwhile, the mature woman needs to shift money away from life insurance into long-term care coverage.


Employer-provided insurance is a great place to start one’s planning, but often it’s not enough. A meeting with an insurance professional can help women select the lowest-cost coverage at the right time, experts say. Life and disability insurance, for example, will be about half as expensive in a woman’s mid-20s vs. her mid-40s. Similarly, long-term care coverage will cost much more if purchased at age 55 vs. age 45.


Guardian’s Umbach is only 42, but she bought long-term care insurance three years ago when it was more affordable. “Because I don’t have children, what are the alternatives if I do need care someday?” she asked herself. Yet having children doesn’t preclude women from having to consider such issues. In fact, it weighed heavily in Fine’s decision five years ago to purchase long-term care coverage.


”One of the greatest gifts we can give our children is taking out these policies and paying for them when we’re young,” says Fine, 47, “so the burden doesn’t fall on them later.”
 â€¨

Peace of Mind

Still, many women are hesitant to act. Mary-Jo Knight of AXA Advisors in New York worked with one such client whose company grosses more than $5 million annually. Her financial plan showed that she needed about $3.6 million of additional life insurance and enough disability coverage to provide $10,000 to $15,000 more for family living expenses each month. Otherwise the family home and her children’s educational futures could be in danger if she were to die or become disabled. “She’s much more successful than she ever thought she would be,” Knight says. “And she’s too busy to focus on it.”


In fact, State Farm’s Waring says women’s talent for fact-gathering makes them well-suited for regularly re-evaluating coverage so it stays in line with job or family changes.


“Just the way you don’t stay in your ranch house with three times the income, you have to reassess your insurance,” says Waring, who does so with her husband every two years.


When former Sprint Nextel brand manager Teresa Glidewell launched Stiletto Brands, a New Orleans–based vodka distributor, last September, Glidewell bought an additional life insurance policy so her fiancé could keep their house and their five horses if she died. “It’s extremely intimidating,” Glidewell, 34, says about navigating insurance as an entrepreneur. “But once you start looking into it, you think, ‘It’s OK, I’m a businesswoman, I can figure it out.'”



Good insurance planning goes beyond guaranteeing coverage if someone’s sick or disabled. If income goes up enough, Waring says, it’s also time to think about buying a personal liability umbrella policy to guard against potentially catastrophic lawsuits. Insurance also can help protect and strengthen a woman’s overall financial picture well into the unforeseen future.



Suzanne Nicholson, executive vice president at Philadelphia-area Meyer Design Inc., began working with Patricia Miller Picardi of the Independence Planning Group, a Guardian affiliate, in 1998. Her goal? To quit working early and sail around the world. Among other things, Picardi recommended that her unmarried client invest in whole life and buy an umbrella policy.

Since then, Nicholson has married a man with two children; she also financially assists two nieces whose mother died. By meeting annually with Picardi and making “tweaks,” Nicholson has ensured that her life insurance will eventually go to her husband and other money to the younger generation. “If done right,” Picardi says, “a good plan should be seamless and flexible to follow you throughout life.”