Basic Insurance

In addition to health, home, umbrella, and auto insurance, each family and most individuals should consider a few other types of insurance to protect their assets and overall financial plan. Planning for the unexpected is important, and insurance serves that purpose. It's a safety net that provides relief in times of crisis, ensuring your financial plan stays on track. It's not an investment that grows over time; it's a shield that protects your financial plan from being derailed, provides peace of mind, and reduces the burden of unexpected events. Here are a few additional types of insurance to consider for yourself and your family.

Life Insurance

Life insurance is a must for individuals who have people who depend on their income or even their non-income support to get by day to day. And even if you are single, you might consider a policy that will at least cover your funeral expenses vs. leaving it to your family/friends to figure out and arrange when already dealing with grief.

Among the various life insurance options, term life insurance stands out for its affordability and suitability for most individuals. Other types, such as whole life or universal life, often come with a higher price tag for the coverage they offer.

Several factors, including age, health, coverage amount, term length, and occupation, influence the cost of life insurance. A common guideline is to choose a policy with a death benefit of ten to twelve times your household income. As the Ramsey Solutions Team suggests, stay-at-home parents should also consider a policy covering child care and home care costs, somewhere between $250,000 to $400,000.

As far as length of term goes, consider a 15 to 20-year policy. Life insurance is only necessary when someone depends on one’s income to go about their daily life. Eventually, children grow up and move out, and this should be enough time to build wealth and become self-insured.

Lastly, life insurance costs continue to increase, so getting covered sooner rather than later will save money. Locking into a level-term policy will ensure the price does not change for the policy's full term. The need for an additional policy may occur as income goes up. In that case, adding extra coverage is possible with an additional policy.

Long-Term Disability Insurance

Long-term disability insurance is also a must-have for working adults. Becoming disabled and unable to work for a prolonged period can be devastating to a family. The Social Security Administration claims that “About 1 in 4 of today’s 20-year-olds will become disabled and entitled to Social Security disabled worker benefits before reaching age 67, and 65% of the private sector workforce has no long-term disability insurance.” -SSA.gov  

That is a crazy statistic and furthers the need for long-term disability insurance. You can get Social Security Disability, but that can take a long time. First, you need to be approved for the government benefit, and then, if you are approved, you must wait five months before you can get your first payment.

Having a long-term insurance policy can bridge that gap. A common question is, “Should I have short-term disability too?” Short-term benefits last between three to six months, depending on the coverage. That is also how long it takes for long-term policies to start. Planning correctly can avoid the need for short-term disability insurance if you have a fully funded three to six-month emergency fund.

The cost of long-term disability is typically 1-3% of your income. Even if you have a relatively safe job, that does not eliminate the need for coverage. However, it can help lower the cost.

Identity Theft Protection

With the rise of AI and technology in general, protecting your identity is more critical now than ever. Millions of people are victims of identity theft every year, and that number is growing.

In 2023, 5.7 million identity theft cases were reported to the Federal Trade Commission (FTC), and identity theft cases have almost tripled in the last decade. – FTC Stats

The cost of identity theft protection varies, but finding an affordable policy with a quick internet search is easy. Here are a few easy ways to avoid becoming the victim of identity theft:

• Beware of phishing emails or spam calls.

• Do not give away your social security number unless you know it is safe to do so.

• Watch for mail or packages and get them promptly when they arrive.

• Shred documents with sensitive information.

• Use strong passwords or a password generator for online accounts.

• Do not use easy-to-guess security questions.

• Always use two-factor authentication.

• Do not use public wi-fi to check your bank account or other sites with sensitive information.

• Add alerts to your credit cards and bank account.

Where to look

These additional types of insurance can be a lifesaver when one least expects it. This article is meant for general informational purposes and should not be taken as advice. Several of our agents at Whitaker-Myers Group are licensed in multiple states and would be happy to discuss in more detail these insurance products or any other type of insurance you are looking for.  

If you would like to talk to someone about how these could benefit your financial plan, we suggest contacting your advisor. If you do not have an advisor, Whitaker-Myers Wealth Managers has a team of advisors ready to help answer your questions.