Policy Types

Understanding Asset Protection

As the name implies, asset protection protects your assets -- your home, your car and your recreational vehicles -- in the event you need additional insurance coverage so you won’t lose those assets.

What Is Asset Protection?

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 Insurance

When 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 Insurance

Not 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 miniscule in contrast with what could lose.

 

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Asset Protection

There are many things in your life that you want to protect. Asset protection allows you to protect the things you work hard for. This article examines how you can protect your assets through guaranteed asset protection, credit life and credit disability insurance, life insurance or liability umbrella insurance. Finding what works best for you can come in handy when the unexpected strikes. For more information, visit our learning center.


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 is 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.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by 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.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

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