Insurance World

How long could you and your family get by without your income? A month? Maybe three? What would happen if you were unable to work for a year or more? The simple fact is that most of us don’t have the cash reserves to weather an unexpected loss of income in the event a serious injury or illness prevents us from working. And besides, you don’t want to deplete the money you’ve been saving for retirement or your children’s education just to keep the bank from foreclosing on your house.

Think you don’t need disability insurance? You’re healthy and you don’t work in a high-risk occupation, right? So what’s the chance anything could happen? According to a Gallup survey, most people estimate they have only a 16 percent chance of becoming disabled during their working years. But statistics show that a 35-year-old individual has a 50 percent chance of incurring a disability for 90 days or more before they turn 65.

You can’t predict when you’ll need disability insurance or why. But consider that back disorders are the most commonly cited conditions that cause working limitations, followed by heart disease and arthritis.

“Disability insurance protects your family’s financial security. Plus, benefits can be paid directly to you – you can receive a benefits check made out to your name, which you can then use to pay for your living expenses,” said Brad Buechler, first vice president and actuary at Mutual of Omaha. He pointed out that almost 50 percent of all residential mortgage foreclosures are brought about by a disability.

Even if you have long-term disability insurance through your employer, you may want to consider an individual policy as well. Group long-term disability insurance benefits offered through employers typically guarantee replacement of 50 to 60 percent of your salary and begin when sick leave and short-term disability benefits stop. This may not be enough to meet your needs in the event of disability. Also keep in mind that benefits from an employer-paid plan generally are taxable, while individual policies pay benefits free of income tax. Finally, individual coverages are portable and don’t automatically terminate if you change jobs, unlike group coverages obtained through your employer.

To determine if an individual disability policy is right for you, figure out if the total benefit from your group policy would be enough to support you and your family. Typical expenses for most families include groceries, mortgage payments or rent, utility bills, car payments and clothing. Make a list of your expenses and then ask yourself the following questions:

* Do I have disability insurance through my employer? If so, are the benefits sufficient to allow me to maintain my standard of living if I become disabled?

* If my current benefits are not sufficient, what expenses will I cut if my income is reduced by half?

* What other sources of income do I have in the event I can’t work?

* Would my spouse’s income be sufficient to pay my family’s bills?

A good rule of thumb, according to Mutual of Omaha’s Buechler, is to allocate 1 to 2 percent of your income for supplemental insurance, such as disability coverage. The cost of an individual disability policy is reasonable, especially when you consider what is at stake if you don’t have the coverage and become disabled, a much more likely event than most people realize.

Auto insurance can be confusing for most consumers; there are so many different types of insurance and it can be difficult to determine the type of coverage you’re required to carry versus the types of coverage that you really should carry in order to protect yourself but that are not required.

When considering how much car insurance you should have, it is best to do some research and find out what type of insurance is required by the state in which you reside. Not all states require the same levels of insurance. Some states require more types of coverage than others and states also vary in terms of the amount of coverage that is required. So, be sure you know exactly what the minimums are in the state where you live.

You should also understand what is covered by the different types of insurance in order to understand whether you need insurance coverage above and beyond the minimum required by your state of residence.

Bodily injury liability covers injuries that you cause to someone else while driving your vehicle. Generally the rule of thumb for this type of coverage is to purchase more than is required by your state minimums in order to protect your private assets from a law suit in the event that you injure someone.

Medical payments or personal injury protection, commonly known as PIP covers the treatment of injuries for the driver and the passengers of the vehicle. Depending on the level of coverage, this type of policy will compensate lost wages as well as medical payments.

Collision covers any damage that occurs to your vehicle in the event of an accident, even if it is your fault. Of course, a deductible will apply. Your lender will generally require this type of coverage while you still owe on the vehicle.

Comprehensive coverage is for the loss of your vehicle due to damage by something other than a collision such as theft, fire, natural disaster, vandalism, etc. Again, your lender will probably require this coverage for a financed vehicle. Once your loan is paid off, it’s up to you whether you want to continue carrying comprehensive and collision coverage.

Uninsured and underinsured motorist coverage can come in handy in the event that you are either involved in a hit and run or if you are hit by someone who does not have insurance or who is underinsured.

When considering how much insurance to take out, start with the amount that is required at a minimum by your state and then consider whether you’re required to take out any additional coverage due to lender requirements. Remember that while we all hope we won’t have a need for insurance, in the event that we do, it can be a financial lifesaver.

Finally, don’t forget to consider your options regarding deductibles. Raising your deductible can help you lower your premiums and that can make taking out additional insurance coverage more affordable. Just be sure you can reasonably afford the deductible in the event you need to use it.