I recently attended a webinar by the New York Public Library titled Insurance is Wealth Protection. The speaker started out by saying “Insurance is often misunderstood and improperly explained." The purpose of this post is to discuss essential “need to knows.”
Below are six key
take-aways:
The Purpose of Insurance-
Insurance provides financial protection against unexpected losses or risks. It
helps individuals and businesses recover from events like accidents, illness,
or property damage. Insurance promotes stability, peace of mind, and economic
security by transferring risk from the insured to the insurer and helping make
policyholders whole after suffering a financial loss.
Life Insurance-
The purpose of life insurance is to provide financial support to beneficiaries
after the policyholder's death. It helps cover expenses like funeral costs,
debts, and daily living needs. Life insurance ensures loved ones maintain
financial stability. Key factors to consider are age, number of dependents, and
dependents’ financial needs. The speaker quoted an orphaned young adult (the
child of a client) who told him “thank goodness my parents did this for me.”
Life Insurance Types-
Term life insurance covers a person’s life for a set period. Usually, you can purchase
coverage increments of 10 to 30 years. About 85% of term policies expire and
beneficiaries get nothing. Permanent insurance covers your life for life and
usually has a cash value component that policyholders can borrow against. The
speaker recommended consulting an insurance specialist and doing a life
insurance needs analysis.
Health Insurance-
The speaker noted that 66.5% of bankruptcies involve medical debt. Also, the
cost of health care keeps going up every year (as does the cost of medical
supplies and medical malpractice insurance) and this is a major challenge of
our times. Webinar attendees were advised to be aware of what they are NOT
covered for and to shop around and make adjustments to their coverage (if
needed) during open enrollment season.
Disability and Long-Term Care
Insurance- Both policies cover the risk of being unable to
maintain our lifestyle or independence. The former is targeted toward working
age adults who are incapacitated and unable to work due to illness or injury
and the latter toward older adults and others who are frail and need assistance
with activities of daily living. For both policy types, coverage is generally
more affordable the younger and healthier you are.
Property Insurance-
The speaker advised asking about the cost of replacing your home to make sure
you have adequate coverage. Also, preparing an inventory of personal property
and considering umbrella liability coverage if you have wealth that could be
seized as a result of a judgement.
The webinar ended with this final thought to consider: "Just because you have insurance does not mean that you are properly insured." When in doubt about your coverage, review your insurance policies carefully and seek professional advice where needed.
This post provides
general personal finance or consumer decision-making information and does not
address all the variables that apply to an individual’s unique situation. It does
not endorse specific products or services and should not be construed as legal
or financial advice. If professional assistance is required, the services of a
competent professional should be sought.
