Everyday Affluence: Here’s the Deal with Insurance Coverage

Insurance is nobody’s favorite bill to pay. It’s kind of like making a bet that something bad’s going to happen to you — and paying that bet every single month. But for many of us, insurance coverage is critical. After all, if that something bad does happen, it could quickly leave you in financial ruin if you’re not prepared.

But which kinds of insurance coverage do you actually need? And what’s the best way to go about obtaining them?

Four Common Types of Insurance Coverage

From basic medical coverage to more, shall we say, “advanced” options, the market is awash with insurance policies to purchase. That doesn’t mean you should necessarily go out and buy all of them immediately… but you don’t want to go without critical coverage, either.

Here’s what to know about four of the most common types of insurance coverage as you consider your own personal needs.

Life Insurance

Assuring your family’s future in the case of your own death is a noble cause, well worth the hassle of pitching in a few bucks each month. From sky-high funeral costs to everyday expenses, a life insurance policy can keep your loved ones afloat after you’re gone.

Depending on your job, you may get life insurance coverage as part of your benefits package. Which is great, of course. But we caution against using it as your primary family coverage. After all, you could lose your job, and you never know when life — or death — is going to happen.

You need an individually underwritten policy, which is usually cheaper than group coverage anyway. The best way to find it? Use an independent agent who takes your medical history, so you can shop for the best policy and get approved. (That whole “approval” thing doesn’t always come so easily.)

We usually refer our clients to Bob Gertie of Advisor Insurance Resource, who can help you find the life insurance product that’s right for you. He’ll help you assess your personal goals with life insurance, as well as financial factors that can impact your overall insurance needs.

Term life insurance is, in our opinion, almost always the right answer, unless you have a mitigating circumstance, such as:

  • A family member with special health care needs
  • Estate tax exposure (which generally now means estates valued in excess of $10.8 million)
  • An income level placing you in the highest tax bracket

For full details, though, talk to a professional! That’s what they’re there for.

Disability Insurance

Disability insurance can help you sustain an income even if an illness or injury precludes you from working. It is, in fact, most often obtained through your workplace. And contrary to life insurance, you may find that group coverage is significantly cheaper than a similar individual policy.

That said, the riskier your job, the more costly disability insurance coverage will be — if you can get it at all. But it’s exactly those who do have risky jobs who really need this coverage. When your earnings depend on your physical strength, one bad fall or mechanical accident could leave you and your family homeless.

If the group coverage offered through your workplace is insufficient, you may be able to augment your policy through an independent agent, or even turn to a trade group. Unions and similar organizations sometimes offer decent disability plans to members relative to their costs.

Long-Term Care Insurance (LTC)

The progress we’ve seen in the medical field is a bit of a double-edged sword — especially considering how expensive the resulting care can be. For those who live with chronic conditions or require help taking care of themselves, the costs can be astronomical, and they’re not always covered by your primary health insurance policy — or even Medicare or Medicaid.

That’s where long-term care insurance, or LTC, steps in. This kind of insurance helps you pay for long-term healthcare costs, such as those of an assisted living facility, adult day care center, or in-home care.

That said, ideally, you’ll accumulate enough assets over your lifetime to eliminate the need for long-term health care coverage — though if not, it’s a good idea to augment your existing coverage with a policy. Your costs will obviously be determined by your coverage provisions, so it’s worth shopping around. We suggest you look for a policy that mitigates some of the risk, like a three-year policy, before taking on the more major expense of something like a lifetime inflation-adjusted coverage.

Health Insurance

Yes, it’s expensive, and yes, that stinks.

But you absolutely must have health insurance. There’s just no way around it with the way our country’s system is set up. Even if you go the high-deductible route and pair it with an HSA, you can’t forego health insurance coverage entirely, no matter how young or fit you are. Things happen!

Need More Help with Insurance Coverage?

In an ideal world, each of our clients would save and invest enough of their wealth to eliminate the need for all personal insurance coverage, with the exception of health insurance. But as we all know, we don’t live in an ideal world — and you never know what tomorrow might bring.

For a comprehensive review of your financial circumstances and insurance coverage needs, reach out to us directly. We’ll start with a free 45-minute introductory meeting and move on from there. Along with assessing your existing and potential insurance policies, we’ll go the extra mile to ensure all your bases are covered, so you can leverage your wealth to lead the worry-free lifestyle you’ve earned.

investing for retirement ebook ipad - McClain Lovejoy
investing for retirement ebook ipad - McClain Lovejoy
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