Curious about some new or enhanced benefits through your employer or an association group? These benefits could include various types of insurance coverage that could be of value to you and your family. A study by LIMRA entitled, Closing the Life Insurance Gap, documented that U.S. households have $11.0 trillion of existing life insurance coverage, and another $15.3 trillion of needs not covered by existing financial resources or life insurance. In other words, America is under-insured (for life) by $15.3 trillion!
When buying insurance, it is generally about sharing risk, taking advantage of leveraging opportunities or adding peace of mind if something were to happen. This month I’m reviewing common types of insurance coverage that offer financial protection to you and your family. I am available to review existing coverages with you or see where there may be gaps which need to be dealt with.
In general, you want to have enough life insurance coverage (when coupled with savings and income) to allow your family to continue living the lifestyle to which they’re accustomed. But changing circumstances may leave a gap in your life insurance coverage.
For example, if you have life insurance through your employer, a job change could affect your coverage. Your new employer may not offer the same amount of insurance, or the policy provisions may differ. Review your income, savings, and expenses annually to help ensure that the amount of life insurance you have matches your needs.
Long-Term Care insurance
As we get older and our health declines, the greater the chances are that we will require home care, nursing home care, or other assisted-living arrangements. This care is quite expensive, and Medicare, HMOs, and Medigap don’t pay for it. You might want to look into purchasing long-term care insurance (LTCI) to protect your assets in case you need long-term care.
Whether or not you should purchase LTCI depends on your age, medical history, assets, and income. If you meet some of the following criteria, you might want to seriously consider it:
- You are between the ages of 40 and 84 (generally, LTCI is not available to those over 84)
- You have a family history of Alzheimer’s disease
- You own substantial assets that you’d like to protect
- You have family members to whom you wish to leave your assets
- You can afford the cost of LTCI premiums now and will be able to afford them in the future
- You are in good health and are insurable
Disability Income insurance
Everyone who works and earns a living probably needs disability insurance. If you suddenly became disabled and were unable to work, could you still meet your financial obligations? Could you get by without having to use savings or borrow from relatives? If not, you’ll want to make sure that you have adequate disability insurance coverage that is designed to pay your expenses while you are disabled and cannot work.
Because you have to meet a strict definition of disability to qualify for benefits from government programs (e.g., Social Security), you shouldn’t rely on them as your only sources of income if you became disabled. Instead, find out if you have group disability insurance through your employer. It may be paid for by the company, or you may pay part of the premium. If disability coverage is not available at work or if you are self-employed, you should consider purchasing an individual policy from a private insurer. Generally, most policies pay between 50 and 70 percent of your gross income and can last anywhere from a couple of months to age 65.
Umbrella liability insurance
When your local weather forecaster (shout out to Tom Skilling) tells you that it’s going to rain, what do you do? Most likely you reach for your umbrella. So why not purchase an umbrella that can protect you in stormy financial weather? Umbrella liability insurance (ULI) can do just that. By providing liability protection above and beyond the basic coverage that homeowners/renters and auto insurance policies offer, ULI can protect you against the catastrophic losses that can occur if you are sued.
Although ULI can be purchased as a separate policy, your insurer will require that you have basic liability coverage (i.e., homeowners/renters’ insurance, auto insurance, or both) before you can purchase an umbrella liability policy. ULI is often referred to as excess coverage. If you are found to be legally responsible for injuring someone or damaging someone’s property, the umbrella policy will either pay for the part of the claim in excess of the limits of your basic liability policy, or pay for certain losses that are not covered.
This is just a brief overview of types of insurance available. I didn’t even get into homeowners and auto coverages, but just know that you can tailor the deductibles and amounts to fit your needs in those categories.