Most of us can name a thousand other things we’d rather do than talk about the potential for catastrophe. Many avoid addressing their need for insurance, putting themselves and their families at risk. The ones who depend on us are most vulnerable, and need to be financially protected.
Do you need insurance? Probably. If you or your spouse can no longer work, will your family be okay? Who will take care of you when you can no longer care of yourself, and what will that cost? What if you can’t afford it? These questions are difficult but necessary in determining the right amount of protection to ensure your family is financially secure in the worst of circumstances.
Life Insurance
Why buy life insurance? Because you love somebody, or you owe somebody.
It’s that simple. While grief is unavoidable, financial struggles don’t need to be part of the picture when a loved one passes. With help from our robust planning software, we’ll determine how much insurance is enough, and recommend the types best suited for you.
Thinking of purchasing life insurance through your employer? While this may look attractive, group life is generally term insurance which may be unnecessarily expensive and typically goes away when you change jobs or retire. Need a way to cover a business loan? Have a key employee? A buy-out option in a partnership? Life insurance can help with all of these and more.
Term Life Insurance
The biggest bang for the buck is found with term insurance. Term insurance is a one-dimensional product; you die and your beneficiary receives a check. It’s called term because it’s temporary, but that can still mean decades of protection at a level premium that can never increase. Term is often purchased early in life when there’s a big mortgage, children who will be dependent for years, or large loans that will need to be covered should something unexpected happen.
There is some flexibility in term insurance. Some term policies often offer riders that pay for long term care for a few extra bucks a month. Additionally, term can generally be converted to provide insurance protection permanently. Most of us accumulate assets, launch our kids and pay off our debts during our working years, making the temporary nature of term life insurance a perfect solution to our life insurance needs.
Permanent Life Insurance
As the name implies, this coverage lasts forever. It comes in several flavors such as whole, universal and variable life, all with their own unique features. The biggest benefit to a permanent policy is cash value accrual. Should the policy no longer be needed, it can be surrendered for the cash value, or borrowed against with most favorable terms.
Permanent life insurance can also be used in other ways like covering estate tax liabilities, so assets don’t need to be sold to meet these obligations. Riders (additions), such as long term care services, can be added to you permanent life insurance, too. Many factors can impact the performance of these contracts – so be sure to work with a licensed professional to find the coverage most suited to your needs.
Disability Insurance
If you’re dependent on your ability earn an income, disability insurance is crucial to well-rounded insurance protection. Ironically, it’s also the most commonly ignored. While you may have some disability coverage at work, it’s important to understand the extent of that coverage.
Many states mandate a certain level of disability coverage – including New York. However, if you’re unable to survive on $700 per month, or will need a replacement for lost wages for longer than six months, you may need additional disability insurance.
Even employer sponsored long term disability has limitations that can leave you with inadequate protection. Lost wages due to disability is one of the frequent causes of foreclosures and bankruptcies, so while it’s annoying to pay for something you hope you may never need, a disability policy can make all the difference if you do.
Disability insurance can also pay business loans or buy out disabled partners. As one would expect, your occupation and lifestyle have a lot to do with whether you qualify for coverage, and which carriers are best suited. Independent firms, like ours, shop the marketplace to find the best match for you.
Long Term Care Insurance
Long term care insurance pays for home health care, assisted living and nursing home facilities. While we generally think of this as a problem for the aged, it’s sadly not reserved for elders. People who become injured or develop health issues may no longer be able to care for themselves. For most of us, it’s not until we’re directly impacted that we understand just how much these services cost. Many assume Medicare and/or health insurance cover the costs. Sometimes that’s true, but only temporarily and under the expectation that you’ll get better, therefore resuming a life independent of assistance. Once that no longer appears to be the case, the only social benefit available is Medicaid, which requires spending most or all your assets to qualify.
Even the most dedicated accumulators struggle to finance the $8,000-12,000 per month price-tag for these services in Ithaca, NY. Lack of long term care coverage is the single biggest hole in many (otherwise robust) financial plans. Several states, including New York offer partnership policies; Medicaid services without spending assets down once insurance benefits have been exhausted. More good news? Long Term Care Insurance is frequently combined with Life Insurance so the premiums don’t go to waste even if you never need LTC services.
Annuities
Like life insurance, annuities pay a death benefit to annuitant’s beneficiary of choice. However, while term and permanent life insurance protect your family from you dying too early, annuities protect you from outliving your income. Annuities offer tremendous flexibility, include varied investment options and protection against market decline, and feature a guarantee against principle loss that many investors find compelling. For additional piece of mind, our dynamic rebalancing service is available with certain annuity contracts.
