What is Insurance Coverage Score?
An insurance coverage assessment evaluates your total insurance protection across 8 policy types, life, disability insurance, critical illness, homeowners dwelling, personal property, health insurance, personal liability, and family income benefit, to identify dangerous gaps that leave you financially exposed. Each area is scored and the total reveals your overall protection level.
The Formula
Score = Sum of (Category Score) across 8 insurance types, each rated 0-10
Worked Example
A 35-year-old with a $300,000 mortgage, two children, and household income of $75,000 assesses their coverage.
- Life insurance: $200,000 policy, below recommended $750,000 (4/10)
- Disability insurance: None in place (0/10)
- Critical illness: None in place (0/10)
- Homeowners dwelling: Full rebuild cover (9/10)
- Personal property: $30,000 cover, below estimated $50,000 value (5/10)
- Health insurance: Employer plan in place (7/10)
- Personal liability: Included in homeowners policy (5/10)
- Family income benefit: None in place (2/10)
📌 Total coverage score: 32/100, critically underprotected. The absence of disability insurance and critical illness cover leaves the family exposed to the most statistically likely risks: 1 in 4 workers experience long-term illness before retirement.
Why This Matters
Financial protection for family
If the main earner dies or cannot work, the family needs income to continue. Life insurance covers death, but disability insurance covers the far more likely scenario of long-term illness or disability.
Mortgage protection requirement
Most lenders require homeowners insurance, but life insurance covering the mortgage balance is equally essential. Without it, a surviving partner must repay the mortgage from savings or sell the family home.
Long-term illness probability
1 in 4 workers will experience a period of long-term illness before retirement. Without disability insurance, Social Security Disability benefits are the only safety net, insufficient to cover mortgage payments alone.
Common Mistakes
❌ Relying on employer sick pay alone
Most employers pay full sick pay for only 3-6 months. After that, income drops dramatically. Personal disability insurance pays until retirement age regardless of employer changes.
❌ Underinsuring personal property by 50% or more
The average US household contains $50,000-$100,000 of possessions, but most policies cover $25,000-35,000. A room-by-room inventory reveals the true replacement cost and prevents shortfalls in claims.
❌ Not reviewing cover after life changes
Marriage, children, house moves, and salary increases all change insurance needs. A policy taken out at age 25 is almost certainly inadequate by age 35. Review annually and after every major life event.
Industry Benchmarks
| Category | Good | Average | Poor |
|---|---|---|---|
| Life cover need | 10x annual income | 5-10x | Below 5x or none |
| Disability insurance | 60-70% of gross salary | 50-60% | None or employer only |
| Personal property value | Full replacement ($50K+ average US) | $30-50K cover | Below $25K cover |
Source: Insurance Information Institute Consumer Research
Benchmark data sourced from Insurance Information Institute Consumer Research.