A sound financial plan is the foundation upon which the security of your future will rest. Protecting the money you’ve worked so hard to earn is one of the most important aspects of any plan. Understanding the most common detrimental risks to your financial future, as well as the options available to mitigate those risks, is paramount to ensuring that you, and your loved ones, are able to continue living in the style to which you’ve become accustomed.
Risk #1: Death – When Your Income Is Gone Forever
If your loved ones depend on your income, what would happen to them if you die unexpectedly? Would your spouse and children be able to maintain their lifestyle without your financial contributions? Unfortunately, in most cases the answer is no.
Death is a major threat to your financial future, and if you haven’t made arrangements ahead of time you could be jeopardizing your family’s well-being. The risk is even more significant if you have young children, particularly in households where only one parent is actively earning an income. How would your family survive if your income was suddenly gone forever?
Luckily, there’s a relatively easy and effective way to ensure that your loved ones can continue paying the bills in the event of your untimely death — life insurance. Multiple types of life insurance policies are available, and each one can be customized to fit your family’s financial needs and budget. Life insurance provides your heirs with tax-free cash to pay for funeral expenses, college tuition, mortgage bills, or anything else that’s necessary to maintain their standard of living.
There’s nothing that could ever replace you, but a properly structured life insurance policy could make sure that your loved ones won’t be even further traumatized by overwhelming financial obligations.
Risk #2: Disability – When You’re Unable to Earn a Paycheck
Most people don’t realize that the likelihood of becoming injured is quite substantial. Accidents can happen at any time, even if you don’t have potentially dangerous hobbies such as rock climbing or scuba diving. If you’re injured, whether in a car accident, while playing sports, or even due to your own clumsiness at home, your financial future is at a significant risk.
Most adults who sustain a temporary disability are unable to work for an average of two to four months. This means that in the absence of your regular paycheck, unless you have adequate liquid savings, you might not be able to pay your bills. If you’re one of the millions of Americans living paycheck to paycheck, a disability that prevents you from working is a serious threat your financial security.
Disability insurance policies protect you in such a situation, providing tax-free money every month so you’re able to continue paying bills such as the mortgage, car payment, and electric bill. You’ll continue to receive a regular, predictable payment for as long as you’re unable to work, or until you’ve exhausted your benefits.
Policies can be tailored to meet your needs, with customizable features including the coverage duration, benefit amount, and even the waiting period before you actually begin getting paid.
Risk #3: Extended Illness – When You Need Care Beyond the Hospital
Perhaps the most overlooked threat to financial security is the need for extended medical care. National statistics show that after age 65, nearly 70% of people will need some form of long-term care, and 35% will enter a nursing home for at least a year.
With the number of elderly Americans expected to triple by the year 2055, it’s no surprise that the cost of assisted living and nursing home care has been increasing by an average of 2% and 4%, respectively. Currently, the services of a home health aide exceed $45,000 per year. The average annual cost of entering an assisted living facility is more than $43,000. Nursing home care costs average between $80,000-$90,000.
Unfortunately, major medical insurance plans don’t typically provide coverage for this type of extended medical care. If you or your spouse might require such assistance, or if you’re taking care of an aging parent, the cost of full-time professional care may be more than you can handle.
Don’t expect the government to pick up the tab, either, unless you’re willing to spend every last penny you have, along with possibly forfeiting your home in the process. Simply put, that’s a long and complicated process that you’d really rather avoid, if at all possible.
Protecting your financial future from the threat of extended illness is possible by using long-term care insurance coverage. These policies will pay most, if not all, of the costs associated with assisted living and nursing home care. Plans are completely customizable and can be designed to include spousal protection, benefit regeneration, and even tax advantages.
The point is that the cost of care for extended illness situations will continue to rise as the number of people in need of such assistance increases. To protect your financial future and ensure you and your loved ones receive the best possible treatment, a long-term care insurance policy is best option available.
There are many threats to your financial future, but with proper planning and the assistance of a qualified industry professional, you can protect your income, savings, and way of life. For more information, or to discuss your situation, please don’t hesitate to contact us.