TPS_Report2_18 - Total Planning System Report Two:...

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Total Planning System Report Two: Insurance I1MBAS12 November 26, 2011
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Introduction After analyzing the tax, investment, and retirement information available from the Trumpette’s MoneyTree report, we reviewed their insurance policies, which include auto, homeowners, health, life and disability insurance. The Trumpettes clearly have some work to do in order to understand their policies, and actually change them to put the couple in a better financial position and effectively manage their risk. We have provided recommendations that will allow them to use insurance as a tool to protect their assets against a potential devastating loss, so that they may focus on building additional wealth and realizing their retirement goals. Homeowners Insurance There are several important steps that the Trumpettes need to take in order to make sure they have the proper insurance coverage. First, the Trumpettes need to understand more than just the premium they pay. They must know what type of insurance plans they have, who their insurance provider is, and they need to ensure that the insurance provider is of high quality and creditworthiness. Further, the Trumpettes need to make sure that they have enough insurance to cover the replacement of the home itself and their personal belongings, as well as the cost of other living expenses if the house is damaged, and their potential liability to others. Finally, if the home is located in an earthquake or flood zone then the Trumpettes will need to acquire additional policies to protect them in the event that one of these natural disasters occurs. In order to figure out how much the structure is worth, the Insurance Information Institute recommends multiplying the square footage of a home by building costs per square foot in the area a person lives. In addition to that, the Trumpettes should add 50% to 70% of their dwelling coverage to cover their personal property. Coverage for other living expenses also needs to be considered in the event of a disaster or damage to the home that makes it unlivable. This aspect of the insurance policy will assist them in paying for expense should they need to leave their home. We would recommend that
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This note was uploaded on 03/07/2012 for the course FIN 6108 taught by Professor Nye during the Fall '11 term at University of Florida.

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TPS_Report2_18 - Total Planning System Report Two:...

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