Most states require car owners to have auto insurance. Mortgage companies require their customers to buy homeowners insurance. And starting in 2014, every American (with few exceptions) will be required to carry health insurance. But you may have even more to protect. The following three forms of insurance aren’t mandatory — but they may help you look after your family now and well into the future.
If you are unable to work due to illness or injury, disability insurance can help you cover living expenses, save for retirement and pay health care costs. There are two types of disability insurance — short term and long term. Short-term policies usually begin paying benefits about one or two weeks after a claim, and continue for a few months up to two years. Long-term policies generally start paying benefits after several weeks to several months and may continue until age 65.
Although employers often pay for workers’ disability insurance, they may offer only long-term policies. Purchasing an additional policy may help fill the gap until those benefits begin.
If you pass away, life insurance benefits can replace income for your family; pay final expenses, including taxes; create an inheritance; or make charitable contributions to a favorite cause. How much life insurance you need depends on your goals and income. The cost of coverage tends to be less if you purchase a policy when you are young and healthy.
The two basic types of life insurance policies can help fill various needs. Term life insurance pays a benefit only if you die during the term of the policy. Young parents, for example, may purchase a 20-year term policy to protect their children during the years that they live at home. Whole life, or permanent, insurance pays a benefit no matter when you die, as long as you continue to make scheduled premium payments. Whole life contracts also accumulate cash value, against which you can borrow. Whole life policies tend to have much higher premiums than term insurance.
Long-term care insurance can help cover the cost of assistance you may need with activities of daily living as you grow older. Neither health insurance nor Medicare will pay for this type of care — you must pay for it out of your own pocket, with long-term care insurance or through Medicaid (which only kicks in after you have depleted your savings). Long-term care insurance helps keep your savings from being consumed by long-term care expenses, and helps ensure that your long-term care needs will not be a financial burden to loved ones. Most experts suggest buying a long-term care policy between ages 50 and 65, as prices increase as you age.
For more information, please contact your Client Advisor.