Your home. Your vehicles. Your lifestyle. Your family's future. There are many things in life that you may want to protect. Paying insurance premiums in exchange for asset protection is a way to guard these things
As the saying goes, “life happens,” and when you least expect it, you may find yourself in need of additional insurance coverage options to help protect what you've worked so hard for. The following are four key asset protection strategies that you might want to consider. .
1. Guaranteed asset protection (GAP)This type of coverage isn't widely understood by many people, yet it can be a huge asset protector when you need it to cover the loan on your auto or your marine or powersport recreational vehicle. It works in such a way that in the event of a total loss or unrecovered theft of your property, it will cover the difference (or gap) between the actual cash value of your property and the balance owed on your loan. GAP coverage is sometimes offered at the time of purchase, but is also available through your insurance agent.
2. Credit life and credit disability insuranceWhen you finance a large purchase, having this coverage can help keep loan debts from becoming a burden on your family. For example, if you financed a vehicle and were to die, or became disabled and were unable to work, the debt owed on that vehicle would be paid by your credit life or disability insurance. The result isn't just having a debt paid, but allows you to ensure that what you worked to provide your family with won't become a financial burden or be taken away from them at a time when it's needed the most.
3. Life insuranceNot too many people realize what a powerful asset protection vehicle life insurance is. Ask yourself, if you were to die tomorrow, would your loved ones have enough to pay off the balance of your mortgage? Or would they have to move out of their home, relocate to an unfamiliar neighborhood, leave friends, and change schools? Life insurance does more than satisfy your loan balance; it helps keep your home in the family and protects your family's way of life and standard of living.
4. Liability umbrella insurance
An umbrella policy is structured so that in the event of a claim for which you exceeded the primary liability limits on your home or auto, boat, etc., it would pick up where you have run beyond your existing policy limits. For example, if you had a $300,000 liability limit on your auto policy and were involved in an at-fault accident resulting in $600,000 worth of damages, your umbrella policy would cover you for the additional $300,000.
Umbrella policies are a critical part of asset protection and are meant to cover you against litigious claims that could bankrupt you. The fact is, if you don't have the money to pay what the court mandates, you could be forced to sell your home, vehicles, and other assets, in addition to the potential of having your wages garnished in order to satisfy the claim.
When you make the decision to finance a home, vehicle, etc., make sure you have the added protection you need in the event of an unexpected illness, disability, financial setback, or catastrophic claim. The added cost can be minuscule in contrast with what could lose.