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Auto Insurance Considerations for Established Families

At this life stage, your cute little kids become teenage drivers, competing with you for the car. In addition – as you enter that mid-life period – your own automotive interests may steer you towards different types of cars than you’ve previously driven.

  • When adding your teenage driver to your policy, be prepared to pay higher auto insurance rates. Although some states do not allow gender differences in auto rates, industry figures show that a teenage female driver can cause rates to increase as much as 50 percent, while a young male driver can boost costs by up to 100 percent.
  • If you plan to provide your child with an automobile to take to college, check on the need for a separate auto insurance policy.
  • At this stage of your life, you may be frantically transporting your kids – and their friends – to sports practices and other after-school activities. Given these chauffeuring responsibilities, you might want to consider increasing your liability insurance in case of an accident.
  • Hopefully, your success in the job market is causing your net worth to grow. So you may want to consider purchasing an “umbrella policy” to raise your auto liability coverage, for example to $1 million, in order to protect your assets.

Here are some tips to prudently control your auto insurance costs:

  • Ask about an “accident forgiveness” clause that promises not to raise premiums if a student gets into one minor accident. In addition, consider raising the policy’s deductible and only allowing their child to drive the family’s oldest, least expensive car. In addition, parents might consider purchasing an older car for their child and foregoing comprehensive and collision insurance on that vehicle.
  • When you add a teen driver to your policy, it’s a good time to evaluate different auto insurance companies and compare costs, as firms differ in their policies for young drivers.
  • If you’re planning to purchase a car for your young driver, keep in mind that auto insurance premiums are linked to the type of vehicle driven. If you’re buying or leasing a new car, check the insurance rates before you make your final choice. SUVs, convertibles and performance vehicles typically cost more to insure than some cars.
  • Parents of new teenage drivers should encourage their children to maintain good grades and to take a driver’s education class, as these steps may help lower your insurance rates.
  • In addition, keep in mind that if your child lives away at school (at least 100 miles) and has less access to the insured vehicle, you may be able to take advantage of insurance discounts.
  • Remember that companies often grant discounts to those who are considered “safe drivers,” so try to keep your driving record – and your children’s driving record – free from accidents and moving violations for at least three years, or consider taking a defensive driving course.
  • College Students and Auto Insurance: Parents and college students should do some homework regarding auto insurance. If a college student is going to be using the family vehicle when visiting home, parents should make sure the child is listed by name on the family’s auto insurance policy. If the student will be taking a car with them to school, parents should check the specific rates for the college’s city and state before deciding whether to keep their child on the family’s auto policy. In addition, the insurance company should be notified each semester if the student maintains good grades, as that accomplishment might lower premiums.

Home Insurance Considerations for Established Families

At this point in your life, your home is very likely your biggest asset – as well as a major cost item in your budget. You may move to a larger house, build an addition or replace that child-stained sofa and inexpensive wall decorations with pricier furnishings and artwork.

  • Remember to add home insurance coverage as you enhance the value of your home and acquire expensive possessions like furniture, computers, stereos and television sets.
  • You should alert your insurance company when making any major home improvement – usually anything over $5,000. You will want to update your homeowners insurance policy to reflect the new enhancement and prevent being underinsured.
  • In maintaining your residence, you must realize that you are liable for things that happen on your premises. Keep in mind that in many states you could be held legally responsible for the actions of anyone who drinks in your home and then has an accident in your house or after leaving it. Your policy should protect you against lawsuits due to these types of liability issues.

  • Remember that backyard items, such as a trampoline or pool, may require you to increase your liability coverage through an umbrella policy that protects you in the event that someone is injured while on your property.
  • As you acquire more valuables – jewelry, family heirlooms, antiques, art – you might want to consider purchasing an additional “floater” or “rider” to your policy to cover these special items. They’re typically not covered by a basic homeowners or renter’s policy.
  • If you have a child about to go away to college who will be living in a dorm or apartment, be sure to check your homeowners policy to see if their possessions will be covered. In many – if not most – cases, they will not be covered under your policy, and you may want to consider purchasing separate coverage.
  • Most important, know what’s not covered by your policy. For example, a break in the water or septic line outside your home will typically not be covered by your homeowners policy but can be a financial drain to repair. Specialized policies may be available to cover these situations; for example, from your water or septic company.
  • College Students and Renter’s Insurance: Whether students live in college housing or rent apartments, they will likely have valuables — such as a computer, TV, stereo and/or video game system — that could be stolen or destroyed in a fire or natural disaster. Parents should check their homeowners policy to see whether it will cover a college student’s possessions. Furthermore, if students live in an off-campus apartment, parents should consider purchasing renter’s insurance through their existing homeowners insurance provider.

Health Insurance Considerations for Established Families

As your family matures, its health needs change. So, when your annual enrollment date approaches for employer-provided health insurance, recognize that you may want to alter elections or eliminate certain types of coverage, if you have the choice.

  • For example, if you and your spouse have decided not to have more children, you may not be interested in a policy that covers pregnancy-related services. But note that if you decline pregnancy-related coverage and your teenage daughter becomes pregnant, she will not be covered. If you still have young children, consider a program with a preventative care option that provides shots and “well visits.”
  • College Students and Health Insurance. Full-time college students are often covered under their parents’ health insurance plans until they graduate or reach 23 years of age. While students are away at college, it is important to check whether the campus health facility, local physicians and hospitals accept the family’s insurance coverage. If not, it might be advisable to purchase a student insurance plan through the college. Be sure the student has a copy of the relevant insurance cards.
  • Keep in mind that health insurance policies will most likely not cover some common childhood procedures and problems, such as allergy tests, braces and replacements for lost eyeglasses, contacts or retainers. Consider contributing money to a flexible spending plan, if your employer offers one, to help you put aside pretax money to cover these types of expenses.
  • Know your rights and entitlements under COBRA – the Consolidated Omnibus Budget Reconciliation Act. If you lose or change your job or decide to start your own business, be sure to familiarize yourself with COBRA so that you’re clear how your family will be covered when your situation changes.
  • If you’re over 50, you may want to consider whether long-term care insurance make sense for you. Before purchasing long-term care insurance, do a thorough analysis of your financial situation to be sure you can continue to afford the premiums for an extended period of years – through your old age until death – and figure out whether you have significant savings or other financial assets you want to protect. Many people find they cannot afford the premiums as they get older and get closer to the point when they are most likely to need the coverage. In addition, make sure you know what triggers will result in benefit payments, as well as the likelihood and potential size of premium increases.

Disability Insurance Considerations for Established Families

  • At this stage, your financial obligations are probably very great. In addition to a mortgage and the normal monthly expenses, if you have children, you are likely putting away some of your salary towards your kids’ college education and your own retirement. Should you become injured for a lengthy period of time it can greatly impact your savings plans. Having disability insurance for both spouses if both are working can help in the event you are faced with a serious illness or accident and can’t work.

Life Insurance Considerations for Established Families

Chances are that at this stage of your life, you own life insurance and are generally familiar with the different types. However, people at this age often begin to ignore their policies. It may be important to periodically review and update your coverage to reflect changes in your financial situation and family composition.

  • One strategy to keep costs down for a growing family may be to take a look at term life insurance, which offers financial protection for a specified time period. For example, term life insurance is often appropriate to provide coverage during your child-rearing years or while paying off a mortgage. You may want to consider this cost-effective way to protect your family while still putting money into other investments.
  • Consider the future costs of your child’s college education when determining how much life insurance you need at this life stage, and remember that permanent life insurance can help to complete a college savings program that is not fully funded. Another option you may want to consider is purchasing a combination of term life insurance and whole life insurance.
  • If you are considering purchasing an annuity – a contract with an insurance company that promises to pay a series of income payments at regular intervals in return for premiums you have paid – explore the different types of options available:
    • Single premium
    • Multiple premium
    • Fixed
    • Deferred
    • Variable

In addition, make sure you examine whether an annuity makes sense for you in terms of your income needs. Ask whether the annuity lets you tap into your principal if you should need it, or whether there are stiff penalty fees. Be sure you understand the fees associated with the annuity, as well as the special tax treatment of annuities, namely that income tax on annuities is deferred until you start receiving the income payments.


QUIZ: Established Families

Considerations for ALL LIFESTAGES:
AUTO    |    HOME    |    HEALTH    |    LIFE

• Special Section: Long-Term Care

• Teen Driving 101

• Get Ready: Job Change

• Get Ready: Turning 50


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• Raising Grandchildren

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