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Posted January 11, 2022 in Insurance


protecting your family

Some types of insurance are required.  Banks require you to purchase homeowners insurance when you buy a home, for example.  But some types of insurance are voluntary, such as policies that protect your income or assets, or that ensure your funeral expenses will be taken care of. 

Here are a few of examples of voluntary policies and key points you should know:

Types of insurance

Disability insurance: If anything should happen to you that physically keeps you from earning a living-such as an accident or serious illness-you want something that protects your income.

Depending on the size of your employer, you may have disability insurance from work.  A typical employer plan would replace 60% of  your income if you’re disabled.  If  you’re living paycheck to paycheck and you lose that paycheck for any length of time, 60% likely won’t be enough for you and your family to live comfortably.  A supplemental policy, which will allow you buy enough coverage to replace 80%- 90% of your income, may be worth exploring.

Property and casualty insurance: This is a category of insurance that covers such things as your house, auto, boat and RV as well as personal liability arising from lawsuits and other claims.  It’s also where many people try to save a few dollars by purchasing the minimum coverage. 

The potential danger of doing so is the risk of incurring more liability.  If you’re the victim of a hit-and-run accident, it’s your insurance that will pay for damages and any medical bills.  If you have the minimum coverage, it may not be enough to cover everything. 

The same is true if you’re at fault and you get sued.  A personal liability umbrella policy provides coverage beyond that of your auto and home insurance policies, and it helps pay any judgments as well as defense costs.

Funeral insurance: Life insurance can be the easiest solution to making sure your funeral expenses are covered.  Term life policies are generally better for most life insurance purposes, but they don’t work for funeral expenses because term life plans have a set end date and can run out before you pass away.  A $25,000 to $50,000 whole life policy should be sufficient to offset inflation and cover expenses of a basic funeral. 

Ways to Save – Not Skimp

There are a few things you can do to save money while keeping adequate coverage.  You can lower your rate by increasing your deductible.  If you go that route, however, you’ll want to think clearly about how many claims you might make in a year to make sure you don’t end up paying more.  And ideally you’d make sure the amount you pay out of pocket comes from your emergency fund and doesn’t impact your other savings. 

Talking to a professional is the best route to take when deciding on the best insurance coverage.  Insurance agents will ask questions designed to get you to think objectively, and they’ll help you determine the best mix of insurance and self-funding for your situation.

Article by Eric Jorgenson.  The article “Don’t Skimp on Your Insurance” originally appeared on Copyright 2017 NerdWallet, Inc.  All Rights Reserved.

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