You have employed the best motorcycle safety tips in preparation for your adventure on the Open Road. You have taken motorcycle safety classes, checked your “scooter” to make sure it is road worthy, and are mentally prepared to hit the road.
Even with the best preparation, we all know that certain things are out of our control. The texting driver, wildlife, road conditions, and an aggressive dog are just a few of the things that can turn your freedom on the open road into a life-changing accident in less than a split second.
Although there is nothing you can do to change an accident after it happens, you can make sure that financial necessities are in place before you take to the road on your motorcycle. Look at our ideas of what you should have in place before it’s too late.
In most cases a level-premium, term policy is best. Followed by an employer group policy. The problem with a group policy is that coverage will probably be lost if you leave your employer. Generally, a permanent policy’s best use is for needs other than those of survivors.
You may be inclined to consider accidental death and dismemberment coverage instead of, or in combination with, traditional life insurance. It’s worth looking at, but generally the premiums will not make sense.
How much coverage should you have? As with many questions, the answer is, “It depends on your situation”. Boiled down, it depends on the needs of those who are financial dependent on you.
Up-to-date Estate Plan
An up-to-date estate plan is necessary in the event of a disability or death. In the event of a disability, it will be important to have the correct powers of attorney, health care directives and other advance directives in place. In the event of a death, an up-to-date will and/or trust makes things easier for survivors. An often-overlooked task is to confirm that primary and contingent beneficiaries are up to date on retirement accounts and life insurance contracts.
Disability and Long-term care
Disability insurance is designed to protect income and long-term care insurance is designed to protect assets.
Many employers offer disability coverage. Generally, long-term disability is more important the short-term coverage. If your employer offers a buy-up of long term coverage take a hard look at securing it. Paying the premium with after-tax dollars will likely make the benefits tax-free. Individual coverage is worth a look to supplement a group employer plan or as a stand-alone if no group plan is available.
Long-term care coverage can help protect assets if you are unable to get out of bed. It’s probably best to have some coverage so you don’t become a burden to family members in case you need care.
Motorcycle Liability Coverage
Is your passenger covered by your liability coverage? Not all policies cover the passenger so check your contract. Uninsured and underinsured coverage can be more important for your motorcycle than your car since serious bodily injury is more probable and could be more severe than if you were in an automobile.
I have often seen passengers on dirt bikes or ATV’s and wondered if the operator has liability coverage. Something to think about.
If you or a passenger is injured while on a motorcycle health insurance may prove to be an important component to your arsenal of coverage. Since most people have health coverage, I won’t go into any detail on this topic.
A stash of cash can be very important to a motorcycle accident victim. As the saying goes, cash is king! If you are out of work or your family needs to pay for a funeral before insurance proceeds come in, this is where cash comes in. A so-called “Emergency Fund” is a vital part of any financial plan and could prove critical to a motorcycle rider.
Having the proper protections in place before the kick stand goes up can help in the event of an unforeseen accident. It may even keep your friends from organizing a benefit ride for you and your family!
Todd Minear, CFP©
Todd Minear is a CERTIFIED FINANCIAL PLANNER™ and avid Harley Davidson Road Glide and KTM XCW rider. He is a Fee-Only financial advisor and does not receive commissions and does not sell insurance or estate planning services.
When considering the purchase of insurance always consult with a qualified insurance professional. When planning an estate, it is recommended that you consult with a qualified attorney.