By: Coleman Fox
Imagine yourself running a marathon. You are mentally, emotionally, and physically dialed in. There are runners to your right, left, front, and back, but you hardly notice. You are on pace to shatter your personal record.
You have trained for months—maybe years—to prove to yourself and others that you can exceed any expectations you set for yourself. The runner’s high has kicked in, and your mind and body are working as an elite machine. Nothing can stop you! All your hard work and effort are finally paying off.
Then you start to get thirsty and find to your dismay that you’ve already drained your water bottle! Fortunately, there is a water station one mile down the road, so you charge forward with determination. Five minutes later, your hamstring begins to tighten, and your mind starts to worry. You’re no longer thinking about your personal record; you’re thinking about getting more water and finishing the race. But before that can happen, you get sidelined with terrible cramps in both legs and don’t know if you can go on.
Running a marathon without water can be like implementing a financial plan without insurance. They both provide two fundamental benefits: peace of mind and replenishment.
Comfort and a Good Night’s Sleep
Insurance provides us with a level of safety and psychological comfort. We can sleep more soundly if we know that our money and family are protected. Insurance can keep a financial plan alive and kicking whenever we need to cover a significant loss.
Evaluating how much and what kind of insurance to purchase can be difficult. There are numerous factors to consider, such as age, net worth, exposure, salary, location, family, and more. Each type of insurance requires you to look through a unique lens to assess the right policy.
Here are three examples of why it’s worth your time and effort to dig deeper past the standard home/health/car insurance policies and choose the right coverage to serve as a safety net for your financial well-being:
Scenario #1 – Home Sweet Home for Fun and Safety
Your outdoor trampoline has been a godsend the past couple of months as you look for ways your kids can blow off steam in the age of coronavirus quarantine. Before social distancing lifts and your kids invite their friends over, you may want to double-check the liability portion of your homeowner’s insurance policy. It covers you against bodily injury or property damage that you, family members, or pets cause to other people. Coverage for trampolines can vary widely according to insurance company and state. Some policies impose no exclusions, some require specific safety precautions such as a fence or locked gate, and some exclude coverage for trampolines all together. Trampoline liability is only one example. There are many others like pools, pets, levels of entertainment planned for the future, etc.
A general starting point for liability coverage in a homeowner’s policy is $300,000 to $500,000. You should purchase enough insurance, though, to cover your assets. If you own property or investments worth more than the liability limits in your homeowner’s policy, you may want to purchase an umbrella or excess liability policy.
Scenario #2 – Accidents Will Happen: Insure Your Income, Not Just Your Assets
No matter how skilled you are at safe and defensive driving, the roads are a hazardous place. You’ve likely examined how your health and car insurance would cover property damage and medical bills in the event of a serious crash. But what if you sustain a life-altering traumatic brain injury that requires months—if not years—of physical therapy and prevents you from working? The fallout would be particularly devastating if you’re the primary breadwinner.
You may already have access to liability insurance from a number of sources—your employer, Social Security, the Veterans Administration, or your car insurance policy. To ensure the most comprehensive coverage of lost income, however, a private individual disability income policy could make sense.
The Insurance Information Institute (III) describes two types of policies—short-term disability with a maximum benefit period of up to two years, and long-term disability, with benefit periods ranging from a few years to retirement age. III details numerous features to look for when shopping for a policy, including noncancelable, guaranteed renewable, cost of living adjustments, and waiver of the premium provision after you’re disabled for more than 90 days.
Scenario #3 – When Serious Illness Strikes
A cancer diagnosis—or the onset of any serious illness—can cause a serious emotional as well as a financial blow to family stability. That’s why it pays to carefully review health, disability (see Scenario #2), long-term care, and life insurance policies, preferably before you fall ill, to gain a thorough understanding of coverage, deductibles, co-pay requirements, and waiting periods. Armed with this knowledge, you’ll also be able to determine how you need in your rainy-day fund to cover emergency expenses.
To come full circle, proper training, endurance, mental focus, and hydration keep your eyes on the race finish line. Do not let something you could have prepared for derail life’s best moments and achievements. Do you have enough for replenishment built-in for protection at crucial moments? Contact FJY Financial, and we will help you decide.