Life insurance and disability insurance are a necessity, but sometimes, they may feel like an expense you can do without.
Putting food on the table, paying your mortgage, building good credit – these are things that are at the top of the list. It may be easy to push to the back of the budget spending money on things you hope won’t ever happen.
But they’re precisely the kind of guarantee you’ll be glad you have.
• One-third of married women own no life insurance at all.
• People generally believe they can’t afford life insurance.
• On average, consumers estimate the cost of life insurance twice as high as the actual price.
And here are some things to consider about disability insurance:
• One in four of today’s 20-year-olds will become disabled by illness or injury and unable to work
• 68% of adult Americans have no savings earmarked for emergencies
• 90% of disabilities are caused by illnesses rather than accidents
“Disability and life insurance can help smooth the financial bumps and twist that can occur during your working years,” said David Polen, a director of product development at Colonial Life. “By taking action, you’re giving yourself greater control to make the choices that are best for you and your family down the road.”
Here’s a primer on why spending money on life insurance and disability insurance may be one of the smartest financial decisions you make.
#1 – You’re not invincible
Most employees do not have enough savings to cover their income loss, even for a short time.
#2 – Disability insurance makes sense at any age
People who are just beginning their employment journey need to protect future earnings. With younger workers dealing with school loans, car loans and rent, income protection is just as important as it is for workers with family and mortgage expenses.
#3 – Additional coverage may be necessary
Even if your employer offers disability insurance, you may want to consider buying additional coverage. With a supplemental disability insurance policy, you can keep the coverage even if you get a job with another company.
#4 – Everyone needs life insurance
Life insurance is a critical component to your financial health. Everyone should have some life insurance to help cover financial obligations. Even if just for funeral expenses.
It’s also best to purchase life insurance sooner rather than later. Life insurance rates are based on your age, so the younger you are, the cheaper the cost. Whole life insurance would be the first type to consider because it will build up some cash value over time that you can use for any number of things, like loans against the policy.
Before you buy, check the amount offered by your employer. You should generally have coverage that equals up to 10 times your annual earnings. If your employer’s coverage falls short, consider purchasing additional life insurance.
Life insurance and disability insurance are just as important – if not more – than paying off your mortgage and student loans. They’re like food for your financial health and future, so don’t let fear or confusion stop you from spending money on the things you really need.