Carrie Schwab Pomerantz
(SET ITAL) Dear Carrie: I'm 63 and will leave my full-time job in six months. In an effort to cut back, I'm looking at all my expenses, and it seems like I'm paying an awful lot in different types of insurance premiums. What do I really need at this point in my life? -- A Reader (END ITAL)

Dear Reader: Smart question. Insurance needs really are different at different points in life. Some insurance is essential at any age, but some can be just a waste of money. So at your age -- and as you approach retirement -- this is a great time to take a step back and re-evaluate. Here are my recommendations:

HEALTH INSURANCE IS A 'MUST-HAVE'

No matter your age or job status, you have to have health insurance. Not only because the law now mandates it but also because it's essential for your personal and financial security. So the first thing is to look at how your health coverage will change when you leave your job.

If you'll lose your group coverage, you have to fill that gap with another policy. COBRA is the easiest way to do that. It basically continues the coverage you've had through your employer, but it comes out of your pocket. Check with your employer while you're still working to make sure you're eligible. If you are, the good news is that COBRA also covers your spouse or other dependents that have been on your policy. The bad news is that it will most likely cost significantly more than you've been paying as an employee.

Alternatively, you can now shop for a policy through your state health insurance exchange or the federal health insurance exchange. You might even qualify for a lower premium, depending on your income.

Once you turn 65, you'll be eligible for Medicare. But even at that time, you'll want to have a supplemental (Medigap or Medicare Advantage) policy to cover costs standard Medicare doesn't.

A CAR REQUIRES INSURANCE

It's essential to have liability insurance in the event of an accident. Most states require you to carry at least basic liability insurance to cover damage to others, including both bodily injury and property damage. Liability insurance also pays for legal bills. If you want to cover things like damage to your car or theft, that's your decision.

HOMEOWNERS AND RENTERS INSURANCE GET HIGH MARKS

If you own your home, make sure your coverage adequately protects both your dwelling and your possessions. Property values in your area may have risen since you first took out the policy, so double-check that your current coverage would actually pay replacement costs if your home were damaged or destroyed.


Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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