Life Brings The Unexpected, Make Sure You’re Covered
You Need Two Things In Life To Be A Survivor – Savings And Insurance
Many folks are over committed financially. It is common to have a house, car, boat, RV and credit card payments going out every month. People perceive it as living the good life but when one of the household incomes is reduced or there is a job loss stress may set in. Many people in the $75,000 to $100,000 income range live the good life but save very little for a rainy day financially. Even if you don’t have the proverbial 6 months in savings there are a lot of families that can’t even fix the car or appliances without whipping out the charge card. Look at it this way charging $500 today is like charging $1,000 because you not only have to repay the $500 next month but you were not able to have the $500 for the next month when the next breakdown occurs.
Some folks claim they are insurance poor! Put a different way they need to consider a mix of savings and insurance. Insurance with higher deductibles could allow you to put the savings in premium in your pocket to save. Business calls it “self retention”. Simply put the business is taking responsibility for the high deductibles but understands the need for good insurance.
There are 5 types of insurance you need to consider. The fifth type is for middle age folks thinking about “Long Term Care” coverage and is for the time ahead in life when you may need nursing home care.
PROPERTY & CASUALTY
You will need this to limit your loss if your car or house are damaged. If you have a lien on your car or home the lender will require this.
If you injure someone else you should have a sufficient amount of liability insurance. Most auto and home insurance policies have somewhere in the $300,000 to $500,000 range. I suggest that you have at least $500,000 with a one million umbrella policy. For the most part extra liability coverage is reasonably priced and should be seriously considered.
LIFE
Life insurance works for you when you are not here to work and care for your loved ones. The most reasonable way to cover your life insurance needs is through purchasing term life. Basic term life premiums are cheap but increase each year on the policy anniversary date. Many folks use level term life. Level term premiums are adjusted at an agreed upon date, 5,10,15, 20 year terms are popular terms that are issued. These level term policies cost more than annual term life but for a person looking to lock in a coverage period for a specific reason this a great life product. Young families find level term life secure to cover the cost of raising a family and caring for their spouse if they die while knowing the premium will stay at a stated cost for a specific period of time.
MEDICAL
Many people today can’t afford to buy health insurance. Many others state that you can’t afford to be without it! Other than health insurance, some folks are helping each other through a cooperative effort that shares in another persons medical bills. One not-for-profit organization that I have read about issues a letter of need to the members in the network and then encourages the other members to send the predetermined monthly share amount to the person in need to pay their medical bills. For 2012 the example of what an average monthly member share is was $135 for one person, $270 for two persons, and $320 for a two parent family.
Becoming creative to insure yourself against unexpected medical bills and hospital stays is something to consider. Doing an Internet search you can see that a large number of personal bankruptcies are from the uninsured. If they had any amount of saving for retirement or a rainy day it was quickly wiped out when a person is forced to go uninsured for medical help at a hospital or doctor combination.
One creative way to mitigate your losses and possibly afford the premiums are to purchase health insurance with deductibles in the $10,000 and up range.
Finally get yourself educated on the new health care law that is being phased in over the past couple of years. It is some of the best knowledge you can gain since you probably will some day pay through the nose or let your insurance company help you cover the cost of health care!
DISABILITY
Death is related to the event that one leaves this bodily life. Another form of death is economic death. If you can not work and do not have another source of income how will you pay for your housing, food, and related costs of living? A basic disability insurance policy with a 30 to 60 day elimination period before benefits start may be a good way to survive such an unexpected event in your life and keep premiums as low as possible.
LONG TERM CARE
Most people never buy this insurance coverage. Basically it will pay a predetermined amount for a predetermined period of time to have skilled care for you when you can not care you yourself. There are many different varied policies. Some pay for nursing home care other pay for care at home.
SAVINGS
I remember the older folks saying that “a penny saved, is a penny earned.” Another rule of thumb, have at least 6 months of savings. Rules of thumb don’t work for all family budgets. The best way to save, save something each pay check no matter how little it is. This is the one area that a lot of people really have failed to plan for. All of the above illustrations of insurance assume that a deductible will be paid before your insurance coverage is paid. If you are living the perceived good life but have little or no savings you may eventually have a budgetary disaster. Even if you never have an insurance claim you will still need savings for home and auto repairs, savings for a well deserved vacation. Put your own imagination to work how to save for other things including retirement.
The information contained herein is for illustration and may or may not apply to the user. The reader should obtain advice from a specific professional to determine the best application for their financial, legal and insurance application.
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