Most people prefer not to think about it. But it's an important question. Will your family be financially secure if you are injured, become seriously ill, or worse?
Several types of insurance can protect you and your family if the unexpected happens.
Whether permanent or temporary, a disability can leave you unable to work. And being disabled may be more likely than you think. According to the Social Security Administration, a 20-year-old worker today has a 30% chance of becoming disabled before retirement.
You can buy a disability insurance policy that offers some peace of mind. If you become disabled and can't work, it will pay you a percentage of your lost income.
There are two types of disability insurance: short-term and long-term.
Short-term disability insurance covers events that keep you out of work from 60 to 180 days, depending on the policy. This might include absences due to pregnancy and giving birth, recovering from surgery or an accident, or undergoing treatment for cancer. Short-term disability policies typically pay 80% of your income.
Long-term disability insurance applies to extended disability periods. They usually pay 60% of your income. But the payments can last for much longer periods, even for the rest of your life, depending on the policy.
You should see if your company offers disability insurance. Some states also have programs for people who qualify.
Life insurance can give your family financial support after you die.
There are different types of life insurance policies. Make sure you understand the terms of the policy you consider buying.
Term life insurance, for example, is good for a set number of years. You pay premiums for a certain amount of time. If you die during that time, your family gets the money.
People often get term life to cover their families if their death would have a big financial impact. For example, it could be useful if you are saving money for your kids' college tuition or if you are paying off a mortgage.
Permanent life insurance, by contrast, lasts your entire life as long as you continue to pay premiums. It’s combined with an investment fund. And it usually costs more than term life insurance.
Some life insurance may be available through your employer, but you can compare individual plans using online tools.