1/14/2014 - Financial advisor chimes in on umbrella insurance
One of the country's most well-known financial advisors has given his stamp of approval for umbrella insurance, noting that it's a great buy for anyone who wants to make sure that their net worth is protected.
Dave Ramsay, a best-selling author, radio host and motivational speaker who specializes in helping individuals get out of debt, recently said that one of the reasons why umbrella insurance is an advisable purchase is because it's extremely affordable. Though prices vary from state to state, most standard plans have an annual premium that's less than $200 for a year's worth of coverage.
Some may question, though, at what point they should start thinking about buying a policy based on how much they earn. Again, Ramsay noted that individual circumstances differ, but typically, it should be when someone has a net worth of $500,000 or more.
"Net worth is what you own minus what you owe," he said. "So the fact that you make a million dollars a year is not the determining factor in whether or not you're a millionaire."
As the Insurance Information Institute defines it, umbrella insurance is essentially extra liability protection, kicking in when one reaches the limit on their plan, be it auto, renters or homeowners. In order to be purchased, most insurers require that an existing policy already meet a certain threshold of coverage - seeing as how umbrella insurance typically goes into effect once liability exceeds the limits of the original plan.