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Are You Covered by These Four Key Insurance Policies?

| April 09, 2018
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Insurance is one of those financial products that often doesn’t get the attention it deserves. We prioritize our 401(k) or our child’s college fund because they seem more urgent and tangible. But a great savings rate means nothing if your financial plan doesn’t include appropriate protection against risks. Risk management through insurance is a critical part of a comprehensive financial plan. Without adequate insurance coverage, your financial future is not secure.

With the right insurance tools, you can ensure that your assets are protected and your family or business has a secure future, even if the unexpected happens. Here are four key insurances that are an important part of your financial plan.

1. Life Insurance

Thankfully, this is the least commonly used insurance of the four, but the most regularly purchased due to its importance. Life insurance protects your dependents in the event of your death, so it’s crucial to carry life insurance if you have children or other dependents. Additionally, it’s wise to make a habit of updating your coverage based on your needs at least once per year.

As of 2017, 41% of Americans do not carry any life insurance and a third of those who do only have a basic group policy. (1) This is in opposition to the fact that 84% of Americans believe life insurance is essential. Life insurance policies should be purchased to take into account mortgages, non-mortgage debt, childcare, college savings, and more. Stay at home parents should also have coverage since they provide valuable work that would be costly to outsource in the event of their death. Business owners may have other insurance needs to protect the future of their business.

The next three insurance coverages are considered living benefits insurance. In other words, these policies serve as income replacement and health cost coverage tools to have in place in order to ensure that you and your family can reach your financial goals with as little financial disruption as possible while you are living.

2. Long-Term Disability Insurance

The Social Security Administration estimates that the average 20-year-old worker has a 3 in 10 chance of being disabled before age 65, (2) but only one-third of Americans has disability insurance. (3) An accident, injury, or illness that keeps you from working can wreak havoc on your financial plans and set you back months or years. Common long-term disabilities can even include neck, back, or joint disorders.

While many people believe they are covered by their employer’s long-term disability insurance, the coverage may be limited and inadequate. Coverage of up to 2 years is the typical limit for employer benefit long-term disability plans. The need for a private long-term disability coverage will pick up where employ long-term benefits fall short. Before your employer long-term benefit is activated, most employer’s short-term benefits will provide coverage for three to six months. If you have a high-paying job, it’s especially crucial to purchase long-term disability insurance to protect against an unexpected loss of income.

3. Critical Illness Insurance

While no one wants to think about a life-changing illness entering their life, it happens more than you might think. Critical illness insurance pays a lump sum amount to help with the costs associated with the illness. This insurance is unique because there is flexibility with how you can allocate the funds. You can use it to replace income for you and your spouse while you are dealing with the illness or it can provide for alternative medical treatments not covered by government health insurance. If you don’t want to be worrying about money while dealing with a serious illness, consider critical illness insurance for peace of mind.

4. Long-Term Care Insurance

If you are approaching age 65, it may be a gamble to go without long-term care insurance. According to the U.S. Department of Health and Human Services, an average 63% of people turning age 65 will require some form of long-term care during their lifetimes. (4) Additionally, 20% of 65-year-olds will need long-term care for more than five years.

Long-term care insurance covers the cost of services that include a variety of tasks you may need help with as you age. Today’s long-term care policies offer more flexibility and benefits than ever before. It is important to understand the long-term care insurance options available to you and whether or not a policy is appropriate for your lifestyle and needs. While some policies can be expensive, requiring long-term care without insurance in place can be financially devastating.

Have you reviewed your insurance coverage within the last twelve months? If not, you may benefit from a comprehensive review to protect your family and your financial future. If you need a second opinion on your portfolio or would like to discuss how insurance can lower your risk,

contact me at (626) 529-8347 or email me directly at ricky@hbawealth.com.

About Haydel, Biel & Associates

Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.

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(1) https://www.bestliferates.org/blog/2017-life-insurance-statistics-and-facts/

(2) https://money.usnews.com/money/personal-finance/articles/2013/10/09/why-you-probably-need-more-disability-insurance

(3) https://www.benefitspro.com/2017/05/15/survey-finds-only-one-third-of-americans-have-disa/?slreturn=20180228155805

(4) https://longtermcare.acl.gov/the-basics/

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