“Insurance? Really? Does not God protect me? “If you don’t think you need insurance then why does the Pope have a bullet proof “pope mobile?” Do you feel you are “insured to death?” There is car insurance, home owners insurance, rental insurance, pet insurance, health insurance, disability insurance, long term care insurance, burial insurance, and, let’s not forget the biggie, of LIFE INSURANCE.
Why ANY insurance anyway? Insurance is the ability to protect the things you cannot afford to lose. We all understand insurance when it comes to our homes and cars, and in many cases, our health. These are the items we can touch and feel and make sense of. When it comes to the issues like disability and life insurance, we get a little cloudy.
“But if anyone does not provide for his relatives, and especially for those of his household, he has denied the faith, and is worse than an unbeliever.” 1 Timothy 5:8
WOW, rather strong statement wouldn’t you say? Yep, we need to make sure in the event that we go home to the Bema seat early or become disabled, provision for our family is meet. So how much is enough for Life and Disability anyway? So glad you asked.
Disability: You can get most of your disability coverage through work and that is where it can be the least expensive. Make sure that you can pay those work disability premiums with AFTER-TAX dollars. Why? If you get disabled and you have paid with pre-tax dollars, the benefit is taxed. If you pay with after-tax dollars the benefits ARE NOT taxed. Hey, if I can’t work I don’t want the double whammy of taxation. Most group coverage only covers up to 60% of salary. You can get up to 70% through a private disability contract. Make sure the length of benefits is paid to at least age 65!
Life Insurance: Oh, I can hear the boo hiss, hiss boo now. How much and what kind?
How much: Add up all your debts including mortgage (All My Debts) + (annual income/5%) = total amount of coverage needed. This is a very simplified formula and tends to estimate somewhere in the middle to high side of the “how much” equation. For example, ($250,000)+ ($60,000/5%=$1,200,000)=$1,450,000 needed in coverage. So, I should be worth 1.45 million dead to leave to my wife and furry kids. The good news is the dogs can’t read or understand insurance and IMAKE DARN sure my wife LOVES ME ALIVE.
What Type: I usually am an advocate of TERM INSURANCE where it’s on at least a 20 year term. This all depends upon age and health. Term is usually the least expensive coverage. However, permanent policies also have their place. If you know there is a bad health history, permanent policies can insure you always have coverage. Yes, it may cost more, but you shall always have it.
There is so much more to cover in this topic, however 500 words is all I am allowed. If you are concerned, shoot me an e-mail at email@example.com to chat or see your local insurance professional.