Financial Focus: The Right Insurance
If you’re going to achieve your important financial goals, you’ll need to build an appropriate investment portfolio. But that’s only part of the story – because you also need to protect what you have, what you earn and what you’d like to leave behind. That’s why it’s a good idea to become familiar with the various types of insurance and how they can address short- and long-term needs.
For starters, consider life insurance. You may have important long-term goals, such as leaving an inheritance for your family and providing resources for your favorite charities. You may be able to fulfill some of these through the death benefit on your policy. You can also purchase life insurance to help fill the gap between the amounts you have saved and what your family would need if you died unexpectedly. Thus, insurance can pay for liabilities (such as a mortgage, car payments, student loans and other debts), education expenses (such as college for your children) and final expenses associated with your passing.
Next, consider disability insurance. If you were injured or became ill and couldn’t work for a while, the loss of income could be a big problem for your family members – in fact, it could disrupt their entire lifestyle. Even a short-term disability could prove worrisome, while a long-term disability could be catastrophic. Your employer might offer short-term disability insurance, and that could be enough – but do you really want to take that chance? To protect your income if you were out of work for an extended period, you might need to supplement your employer’s coverage with your own long-term disability policy. Long-term disability insurance, which generally kicks in after you’ve used up your short-term benefits, may pay you for a designated time period (perhaps two to five years) or until your reach a certain age, such as 65. Long-term disability insurance likely won’t replace your entire income, but it can go a long way toward helping you stay “above water” until you recover.
You may also want to think about long-term care insurance. Despite its name, a long-term care policy could meet either short- or long-term needs. On the short-term end, you might need the services of a home health care aide to assist you in your recovery from an injury such as a broken hip. On the other end of the long-term care scale, you might someday need an extensive stay in a nursing home, which can be extremely expensive, and which isn’t typically covered by Medicare. But in either case, you might be able to benefit from a long-term care insurance policy, or possibly a long-term care rider attached to a life insurance policy. And the earlier you take action, the better, because long-term care insurance, in particular, generally becomes more expensive the older you get.
This list of insurance policies, and the needs they can help meet, is certainly not exhaustive, but it should give you an idea of just how important the right insurance coverage can be for you – at almost any stage of your life.
