There are two pictures I’d like to share with you today. The first is our “card of the day” that represents an umbrella or liability insurance agent and the second photo shows little Mark Bertrang as a child next to my grandparents with a goofy look on my face.
What do these two things have in common? They show the potential for the future. We have been discussing our deck of cards with representatives of 25 different areas of your life, how they affect your financial life, and how they all need to work in tandem with one another. It’s very unlikely that you will ever have all of these people in the same room at the same time. Perhaps at your wake, some might show up. That is one of the unique things that we bring to the table. We believe in testing each one of these areas against how they can stand up to positive or negative opportunities or events that come your way.
We have already talked about your homeowner’s insurance agent and your automobile insurance agent. Let’s discuss your umbrella or liability insurance agent. Many people are told to get an umbrella policy for coverage if they get sued because they are at the wrong place at the wrong time and someone is coming after them and their money. This is one of the reasons that we have umbrella liability insurance. If you are sued beyond what your homeowner’s insurance policy allows because someone got hurt on your property (a kid falling out of a tree, someone falling down the stairs), you are on the hook for the rest. If you hurt someone else with your car (a disability or even a death), you are on the hook for the money in excess of what your automobile insurance policy would pay out.
This extra coverage is typically referred to as an umbrella policy. It provides additional coverage in case bad things happen. I like to refer to this as a baby policy when it’s at least $1 million in coverage. If I am speaking with an executive, doctor, or someone with a very, very high income, I suggest that they go to their insurance company and buy the biggest policy they can get because there is an opportunity for someone else to sue them for all of their money. If something bad happens, you don’t want that money to disappear from your personal bank accounts. When that happens, now you’re working for that person. You are no longer working for yourself.
There’s an additional part of this coverage that people oftentimes miss. That’s why I wanted to show you this goofy picture that my mother sent me. Mom said it wasn’t a very good photo because I had this weird look on my face. I had actually never seen this picture of me with my grandparents before. In this picture, they were younger than I am right now. My grandfather was a baker. He’d wake up at 2 a.m. and he worked hard until he was 67 years old. My grandmother also worked in their bakery, which was attached to their house on Main Street in a small town in northern Minnesota. I was a little kid and it must have been winter time. I’m wearing my winter coat and have this strange expression on my face. The reason I’m showing you this is that this kid would eventually become me.
That’s what people forget when they’re looking at an umbrella policy. Yes, you want to make certain that you are protected in case someone sues you, but just like your automobile insurance, you can have what is called uninsured or underinsured coverage. This covers you for the loss of your unrealized income. Over my lifetime, I knew I was going to be making a certain amount of money. Well, maybe I didn’t realize it back in the day, but I realize it now. It’s about protecting yourself and others who may be with you in your automobile. If I had been injured at that age and it was someone else’s fault, what might have been my potential lost income for the rest of my life? Seldom do people consider the loss of earning power for children and their future, so let’s look at someone’s life that is mid-age.
For example, If I take someone who is 30 years of age and suppose they make $75,000 a year. They work for the next 35 years until age 65. If their income remains the same, they will have made over $2.5 million during their lifetime. If they got a consistent 3% raise yearly, that number would be closer to $4 million. With an umbrella policy, you can protect yourself if you get sued, but also if someone hurts you and you are unable to work for the rest of your life. If you are unable to work and get raises for the rest of your life, you may be out $1-$4 million and we’re just talking about an income of $75,000. If you are an executive or own a company, that number could be much larger. My regular insurance company that houses my homeowners and automobile insurance could not provide me with the amount of underinsured/uninsured coverage that I wanted. So, I went with a completely different insurance company to give me the correct benefits that I needed if I got hurt and that person was underinsured or uninsured.
Your umbrella insurance agent is just one of 25 people who should be in a room speaking with you at the same time, but rarely, if ever, has that ever happened. This is an important part of your life and overall planning. You need to make certain this is present with the maximum amount of coverage possible to insure your most important asset, your human life value.
