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A strong financial plan typically includes tools and strategies to both protect your assets and grow your wealth. Today, we’re discussing the protection side of the financial equation.
One of the obvious solutions is insurance. Insurance helps reduce the financial impact of an economic loss. For example, if your car is damaged in a car accident, you suffer an economic loss and auto insurance helps cover the financial impact. Likewise, if your home burns in a fire, you suffer an economic loss and your coverage pays for the cost to rebuild, easing the financial impact.
Homes and automobiles are considered our most valuable assets, so it’s easy to understand the need to insure them. But, hold on a minute. Let’s rethink this.
How did you acquire your home or car? You probably allocated a portion of your monthly income to cover the payment for your house or auto loan. You were probably approved for your mortgage or auto loan based on your income.
Without income, what do you have? No home. No automobile.
You may have already planned for the unexpected by purchasing a life insurance policy. Life insurance helps ease financial stress for your loved ones if you are not here to provide for them.
A life insurance policy may make it possible for the family to pay the mortgage and stay in their home. A life insurance policy can also mean the difference between children attending college or giving up the dream of a college education.
When a breadwinner is unable to work and earn an income, families experience very similar financial stress, and the very same assets are placed at risk. If you are unable to work, your family may struggle to afford basic living expenses. And, your family’s expenses may be even higher than usual due to your cost of care and rehabilitation.
According to disabilitycanhappen.org, just over 1 in 4 of today's 20-year-olds will become disabled before retirement. An event with odds of roughly 25 percent, is an event worth planning for. In many cases disability is caused by illness such as cancer, stroke or heart disease.
A disability insurance benefit helps fill the financial gap when your income is interrupted if you become temporarily disabled. Just as you buy life insurance to secure your family’s financial future in case of your untimely passing, you buy disability insurance to secure your family’s financial future if you’re unable to earn a living. This is an important component of all sound financial plans. Think of it as income protection insurance or paycheck protection insurance.
Your financial advisor can show you options to fit your budget. Remember, even a small amount of disability insurance is better than having none at all. Now that you know how common an income interrupting disability can be, take the next step. Protect your earning power.
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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.
Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.