One of the most overlooked and underrated types of insurance is the umbrella policy. An umbrella policy is a personal liability policy that provides coverage against catastrophic liability exposures involving home, boats, cars, recreational vehicles and sports. This type of coverage is a supplement to the coverage provided in automobile and homeowner policies. The umbrella policy will not become effective until claims exceed the liability coverage limits provided in the automobile and/or homeowner policies.
In addition to supplementing liability coverage provided by your automobile and homeowners policies, an umbrella policy covers personal injuries, including libel, slander, invasion of privacy, malicious prosecution, and wrongful eviction or entry. Other injuries covered can include liabilities arising from business pursuits, business property, rental property, large watercraft and recreational vehicles.
An umbrella policy is purchased for future protection against a large jury award as a result of a lawsuit. What many people may not realize is that when the policy becomes effective, it also provides for the legal costs of their defense. In this sense, an umbrella policy can be regarded as prepaid legal expenses in addition to the protection it provides against large jury awards.
A good umbrella policy is very cost effective. This type of coverage links different policies; thereby, raising the limits on the underlying policies. Umbrella coverage can supplement a million (or several million) more dollars to the automobile and homeowner policies’ liability limit. This approach is more effective than raising the limits on your automobile or homeowner policies. Not only may that coverage be more expensive, it would not expand your coverage as the umbrella policy does. Please note that you cannot carry the minimum coverage available on the automobile and homeowners policies and be able to purchase umbrella coverage. To purchase the umbrella policy, your underlying liability on the automobile and homeowner policies must be high enough to meet the deductible on the umbrella policy. You should consult your insurance professional to verify that your underlying liability is high enough to meet the deductible.
There is no standard umbrella policy. You must find one that matches your particular situation. Generally, the annual premium for an umbrella policy is very reasonable—especially for the “peace of mind” this type of coverage provides. Henssler Financial strongly recommends that you speak to your insurance agent about umbrella liability coverage. For more information regarding this topic, please contact Henssler Financial at 770-429-9166 or experts@henssler.com.
Disclosures:
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
With the 2005 Terri Schiavo case, many individuals, regardless of age, became aware of the importance of communicating their healthcare wishes. Her case, which ensued after Schiavo suffered heart failure and subsequent brain damage at the age of 26, involved a seven-year battle between her husband and her parents over a healthcare decision. She had no written instruction—whether she would have wanted to live by being sustained through feeding tubes and life support. As Schiavo did not have a living Will, the courts were required to decide her fate, leaving speculation as to what she would have truly wanted.
Living Will
A living Will is also known as a “health care declaration.” This is a document in which you can express specific wishes with regard to what medical care you wish to receive in the event you are incapacitated or too ill to make decisions on your own.
This document allows you to make your wishes known in advance, regarding specific treatment methods, such as resuscitation, surgery, use of respirators, administration of drugs, food, water and pain relief. This document does not allow you to select someone to act on your behalf.
Healthcare Power of Attorney
To ensure that your wishes are met if you are unable to communicate, you can name a healthcare agent in addition to or as part of your living Will. A Healthcare Power of Attorney enables you to provide authority to a healthcare agent to make decisions regarding your healthcare needs in the event that you cannot. While we strongly suggest that you name a healthcare agent, it is not a requirement.
In some states, this person is called a “healthcare proxy” or “attorney in fact,” even though the person does not need to be an attorney. You are able to give as little or as much control to this person as you wish. For example, you can give this person the authority to make decisions based solely on the wishes stated in your living Will and/or make decisions as he or she deems necessary should unforeseen instances arise. While this responsibility usually ends at the time of your death, it is also possible to give your agent the authority to oversee issues relating to organ donations and body disposition after death.
In some states, the living Will and healthcare power of attorney can be combined into a single document—often called an “advance directive.” In most cases, these documents become effective as soon as your doctor, or other healthcare official, determines that you do not have the ability to understand the healthcare options available to you, and/or you are unable to physically communicate your wishes regarding your care. If there is ever doubt about the level of “incapacity,” then your doctor, in conjunction with your agent or close relatives, will decide the best time for the documents to become effective.
Choosing a Healthcare Agent
You should take into consideration the following factors when choosing an agent:
- Do you trust the person without a doubt?
- Is the person someone you know will assert your wishes, if conflict arises involving family members or your doctor?
- Where does the person reside? This is especially important in a case when you have a long illness, and the agent needs to stay close to you for a period of time to oversee your care.
- Will the person also oversee your finances in the event of your incapacity? If you have separate agents, disagreements could cause interference with medical decisions, especially when payment is needed to cover medical expenses.
It is also important, but not required, to select an alternate agent in the event that your first choice is not able to assume the responsibility. It is possible to have more than one agent.
You must be at least 18 years old to create a living Will or healthcare power of attorney. You must be of sound mind and be able to understand what the documents are and how they work. As with most legal documents, you must sign these documents and have them witnessed and notarized.
It is important to state your specific healthcare wishes in a living Will. Your doctor or medical institution will be required to follow these wishes. At the very least, you should communicate your wishes to those close to you—your family members and close friends. For more information on your options, talk to your estate-planning lawyer or contact
