How Much Insurance Is Enough?

How much insurance is enough? It’s a great question, and agents at Allen Harmon Insurance hear it repeatedly from customers.

As agents, we are here to help you secure the coverage you need. To do this, we go through sort of a “checklist” process to understand all aspects of your requirement for coverage. Then we lead you through a process to help you arrive at a decision that is best for you.

It is not up to us to decide for you. Independent agents at Allen Harmon Insurance give you the information you need to make a good decision, and then we help you put it into place.

Here is a good way to think about insurance:

There are only four things you can do with risk in your life. You can avoid or prevent it; minimize it; mitigate (lessen or reduce) it; or transfer it. An insurance policy addresses the last tactic – the transfer of risk. In exchange for the payment of a premium, an insurance company promises to provide compensation to restore you from certain losses.

Notice, however, that there are three elements of risk that still need to be addressed. You can never transfer 100 percent of the risks you face, so the process of buying insurance of any kind involves making decisions about how much risk you want to keep and how much you want to transfer (and pay for).

Health insurance provides a good illustration. If you buy a policy with a $500 deductible, every cost above it may be paid for by the insurance company. If you have a $5,000 deductible, you have kept more of the risk and transferred less of it.

In a life insurance policy, a $100,000 death benefit leaves your survivors with less money to offset risk than a $500,000 policy. The same analogy holds true with property insurance, professional liability, etc., etc.

It is all about risk management. Nobody can decide for you how much to keep and how much to transfer, but your independent agent at Allen Harmon Insurance is an expert at helping you make that decision for yourself!

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