Are you living in a house without any doors?
Envision your home: kitchen, bathroom, bedrooms, basement. Now imagine that you removed every door in the house. Although the house may still be functional, you have dramatically reduced the protection and comfort you once knew. What is stopping someone from walking into your home and stealing your most valuable belongings while you are at work?
Having a house without any doors is like having wealth without adequate insurance. The insurance may be functional, but there could be significant problems that you encounter after an unexpected life situation. By the end of this article, you will understand key types of insurance that affect your financial future and what you can do if you are not confident in that coverage.
- Impacts of adequate insurance
- Questions to test your confidence in your coverage
Disability Insurance: Protect Your Paycheck
Example: Mollie works as a nurse at the local hospital and Tyler is a math teacher at the high school. Together, they can live comfortably and cover their mortgage, car payment, and student loans. While playing a pickup game of soccer, Mollie collides with another player resulting in a knee injury that the doctor expects will take a minimum of three months before she can return to work. After cutting out all extra spending, they have enough money in the bank to cover their expenses for the first month that Mollie is recovering. They have no idea how they are going to cover the other two months.
Test Your Confidence: Could your finances withstand a work-prohibiting injury lasting one month? An injury lasting twelve months?
Liability Insurance: Protect Your Assets
Example: Jill is driving on a back road at 35 MPH when a deer jumps out. Swerving to not hit the deer, she unintentionally crossed the yellow line then hit the back bumper of a 2017 Honda Accord and sent both vehicles into the guard rail. Jill is considered at-fault in this accident. She must fix the damage to the other vehicle, the guard rail and the injuries of the other driver. Jill has the minimum liability insurance limits, which only cover $5,000 of the property damage and $15,000 of the other driver’s injuries. These costs quickly added up to more than her insurance coverage resulting in a lawsuit that will put her assets and her future income at jeopardy.
Test Your Confidence: Do I have enough liability insurance to cover all of my assets? Has my insurance agent talked to me about umbrella insurance?
Life Insurance: Protect Your Family
Example: Tyler and Jordan have two children who are seven and three years old. While Tyler is going to college, Jordan is working two jobs to cover the household expenses. Although an uncomfortable conversation, they discuss what would happen to the family if either of them would pass away unexpectedly. It is decided that if either of them passes away they would like to pay off all of the household debt, maintain their current lifestyle and pay for both kids’ college expenses. They take out a life insurance policy that would be enough to cover all of these goals. While neither of them has passed away, they live every day with the peace of mind that their family is protected if they do.
Test Your Confidence: Is your life insurance coverage enough to take care of your family after you pass? Has he difference between term, whole life and universal life insurance coverage been explained?
Disability, Liability and Life Insurance are key areas of insurance to protecting your current and future financial wealth. If there is any hesitation to where you stand in the information above, your next step is to seek a trusted professional to discuss further.