Life, Accident and Disability Insurance
It has probably been a while or more than likely never since the conversation of life, accident, or disability insurance has been brought up as a topic of conversation at a dinner table or a social gathering. Let’s be honest, it’s not a topic that celebrates life or living in the moment and can single-handedly change the mood of the event from celebratory and joyous to uncertain, worrisome, and doubtful. But, how many personal experiences or stories have you encountered either through close friends or relatives where life-changing events came sudden and unexpected? Unfortunately probably more than you would care to count, however that is life in a nutshell, spontaneous, sporadic, and usually unforeseen. There are not many things we can control in this adventure more commonly known as life, luckily peace of mind doesn’t have to be one of them!
What better way to enjoy the now than ensuring your loved ones’ future?
What parts of your life do you currently insure? your health? retirement? What about your home, do you insure that? What about your car? pretty sure that’s insured. Statistically speaking there is a high probability that even the device you are reading this on is insured. In other words, a whole segment of your life is insured in one way or another. Why? Simply because life is filled with a wide variety of uncertainties. However, your family’s future shouldn’t have to be one of them.
A commonly asked question regarding life, accidental, or disability insurance is summed up to “do I even need insurance?” While everyone’s situation is unique, we strongly recommend seeking a professional to assist you in drafting a tailored protection solution. In the meantime, you can simply ask yourself any of the following questions:
- Would my loved ones be able to continue with the same quality of life without me and my income?
- Would my spouse be able to continue paying the bills such as a mortgage, car payment(s), health insurance policies, college tuition if you were suddenly not able to continue contributing your same income account?
- What would your spouse have to forgo if you weren’t able to contribute the same income amount to your household?
It’s easy to lose focus in our daily hustle and bustle, but don’t forget to keep your objectives in sight.
Accidental / Life Insurance
Life insurance, like other types, is financial protection for your family, in the majority of instances where your death was the result of either accident or illness, in which the insurance company would provide a payout. Accidental death and dismemberment (AD&D) insurance, on the other hand only provides a payout in select instances of death or loss of a limb due to an accident and not because of natural causes or illness.
There are small segments in which Life and AD&D insurance overlap slightly and cover similar instances of death, never the less it is important to understand the difference between the two with emphasis on when AD&D would not protect you. On average it is recommended to lean towards life insurance over AD&D coverage, a primary reason being that, while both policies are comparable in price, life insurance covers a wider range in regards to causes of death.
Types of Life Insurance
Life insurance is an agreement between the policyholder and an insurance provider that in exchange for a monthly payment, sometimes referred to as a premium, the insurer will pay a sum of money to the listed beneficiaries if the insured was to die. Life insurance financially helps provide for loved ones who rely on their income.
The most common types of life insurance are:
- Term life insurance – Expires after a set number of years, agreed upon in the policy.
- Whole life insurance – A type of permanently set life insurance where your policy is active as long as you continue to pay the premiums. These types of policies contain an investment-style cash value feature allowing for the policyholder to take a loan against the agreement.
How does disability insurance work?
There are two types of disability insurance, with short-term replacing a portion of your paycheck as the name implies for a shorter period anywhere between 3 to 6 months. Most employees get STDI through an employer, with individuals having an option of a private alternative.
In contrast, Long-Term disability insurance (LTD) provides coverage, as the name also implies, for a longer duration of time spanning for years or even decades. This policy like its counterpart is offered by employers as well but the coverage is usually less than adequate, making employees take out supplemental LTD Policies as a hedge. If this type of insurance is not offered by your employer there are individual options readily available. Policies generally break down into two types:
- Own occupation disability insurance: This type of insurance policy defines a disability as the inability to work at your specific occupation, even if you are still able to generally work. One example would be a heart surgeon that is not able to perform operations due to Parkinson’s Disease and not being able to hold his hands steady. They would still be eligible for benefits if they were to find a similarly satisfying job in academia, applicable since they are not able to continue practicing their intended profession.
- Any occupation disability insurance: for this type of insurance to apply, you must be unable to work at any occupation. This policy is the hardest to claim benefits for, but it’s usually less expensive than an own occupation policy.