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Posted on September 5, 2019

Are You Covered By These Four Key Insurance Policies?

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Published by Daniel Morrison, Wealth Advisor

It seems like you can get insurance for just about anything these days. But while it’s a no-brainer to purchase insurance for your car or home, you might be wondering about all those other policies available. Do you need more coverage? Are they necessary? 

The right insurance tools can help ensure that your assets are protected and your family or business has a more secure future, even if the unexpected happens. So while you shouldn’t run out and get every single type of insurance out there, consider these four types of insurance that are an important part of any financial plan. 

1. Life Insurance

Thankfully, this is the least commonly used insurance of the four, but the most regularly purchased due to its importance. Life insurance protects your dependents in the event of your death, so it’s crucial to carry life insurance if you have children or other dependents. Additionally, it’s wise to make a habit of updating your coverage based on your needs at least once per year.

As of 2018, only 59% of Americans carry life insurance and a third of those only have a basic group policy. (1) This is in opposition to the fact that 84% of Americans believe most people need life insurance. Life insurance policies should be purchased to take into account mortgages, non-mortgage debt, childcare, college savings, and more. Stay-at-home parents should also have coverage since they provide valuable work that would be costly to outsource in the event of their death. Business owners may have other insurance needs to protect the future of their business.

The next three insurance coverages are considered living benefits insurance. In other words, these policies serve as income replacement and health cost coverage tools to have in place in order to help ensure that you and your family can reach your financial goals with as little financial disruption as possible while you are living. 

2. Long-Term Disability Insurance

The Social Security Administration estimates that the average 20-year-old worker has a 25% chance of becoming disabled and losing at least a year of work before normal retirement age, (2) but only one-third of Americans have disability insurance. (3) An accident, injury, or illness that keeps you from working can wreak havoc on your financial plans and set you back months or years. Common long-term disabilities can even include neck, back, or joint disorders.

While many people believe they are covered by their employer’s long-term disability insurance, the coverage may be limited and inadequate. Coverage of up to two years is the typical limit for employer benefit long-term disability plans. The need for a private long-term disability coverage will pick up where employers’ long-term benefits fall short. Before your employer long-term benefit is activated, most employers’ short-term benefits will provide coverage for three to six months. If you have a high-paying job, it’s especially crucial to purchase long-term disability insurance to protect against an unexpected loss of income.

3. Critical Illness Insurance

While no one wants to think about a life-changing illness entering their life, it happens more often than you might think. Critical illness insurance pays a lump-sum amount to help with the costs associated with the illness. This insurance is unique because there is flexibility with how you can allocate the funds. You can use it to replace income for you and your spouse while you are dealing with an illness or it can provide for alternative medical treatments not covered by other health insurance. If you don’t want to worry about money while battling a serious illness, consider critical illness insurance.

4. Long-Term Care Insurance

If you are approaching age 65, it may be a gamble to go without long-term care insurance. According to the U.S. Department of Health and Human Services, an average 70% of people turning age 65 will require some form of long-term care during their lifetimes. (4) Additionally, 20% of 65-year-olds will need long-term care for more than five years.

Long-term care insurance covers the cost of services that include a variety of tasks you may need help with as you age. Today’s long-term care policies offer more flexibility and benefits than ever before. It is important to understand the long-term care insurance options available to you and whether or not a policy is appropriate for your lifestyle and needs. While some policies can be expensive, requiring long-term care without insurance in place can be financially devastating.

Get The Right Coverage

Have you reviewed your insurance coverage recently? If not, you may benefit from a comprehensive review to help protect your family and your financial future. Since insurance can get complicated, someone experienced with insurance policies can offer you guidance on the products available to you and how they can integrate into your other financial strategies. If you need a second opinion on your portfolio or would like to discuss how insurance can lower your risk and protect your assets, contact our office by calling 410-821-6724 or emailing info@jacobwilliam.com to set up a custom listening session.

About Dan

Daniel Morrison is the co-founder and Managing Partner of Jacob William Advisory, a wealth management firm whose sole mission is to service their clients’ needs beyond their expectations. Dan Morrison has 27 years of industry experience, and for the past decade, he has been committed to building Jacob William Advisory into one of the foremost wealth advisory firms. Dan graduated from the Towson University with a bachelor’s degree of finance in economics and obtained his master’s degree in finance from the University of Baltimore. He is a CERTIFIED FINANCIAL PLANNER™ professional and holds the designations of Chartered Financial Consultant® (ChFC), Chartered Life Underwriter (CLU), and Chartered Advisor for Senior Living (CASL). He and his wife Beth reside outside of Baltimore, Maryland, and have three wonderful children. Dan is involved in his church and is a board member for Believe Big, a charity whose mission is to help families navigate the cancer journey. He enjoys spending time with his family, playing golf, and sailing. A good book is also never far from his reach. Learn more about Dan by connecting with him on LinkedIn.

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(1) https://www.tbrins.com/uploads/9/5/9/7/95973204/2018-insurance-barometer-study.pdf

(2) https://www.ssa.gov/oact/NOTES/ran6/an2017-6.pdf

(3) https://www.benefitspro.com/2017/05/15/survey-finds-only-one-third-of-americans-have-disa/?slreturn=20180228155805

(4) https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html