How to Choose Insurance to Protect Your Family

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.

Disability Insurance

Whether permanent or temporary, a disability can leave you unable to work. And being disabled may be more common 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

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.

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Supplemental Health Insurance

When a serious illness or injury sends you to the hospital, you may have a lot of medical expenses that are not covered by your health insurance plan. Supplemental health insurance helps fill that gap.

For example, it can help you pay for:

  • Deductibles (the amount you have to pay before your health insurance kicks in)
  • Copayments (the amount that your insurance plan requires you to pay for a health service)
  • Out-of-pocket expenses (medical bills that aren't covered by your health insurance)

These expenses can add up during an illness.

You may also have other costs that come from a health problem. For example, you may need child care if you or your partner is in the hospital. Traveling to and from treatment centers can also be costly.

Supplemental health insurance, which private companies offer, covers these expenses, usually by paying cash. Such payments often start on the first day of a hospital stay. Limitations vary based on the policy you purchase, so pay close attention to the details.

You can also buy supplemental policies to cover dental or vision benefits, which may not be covered by your regular health insurance.

If you have Medicare, find out more about supplemental coverage, called Medigap, at Medicare.gov.

Long-Term Care Insurance

Serious conditions, such as long-term diseases or major injuries, can mean you need ongoing care that your health insurance doesn’t cover.

For example, you may need to hire someone to help you bathe, dress, and eat each day. Or you may need the type of care that only an assisted living facility can offer.

Long-term care insurance covers the costs of these situations, within limits set by the policy.

You can learn more about long-term care insurance from an insurance agent. Also, check to see if your employer might offer this kind of policy.

WebMD Medical Reference Reviewed by Sarah Goodell on September 16, 2019

Sources

SOURCES:

Social Security Administration: "Disability Planner," "Monthly Statistical Snapshot, February 2013."

News release, National Association of Insurance Commissioners.

Lifehappens.org: "Term Insurance," "Permanent Insurance."

National Association of Insurance Commissioners: "Life Insurance FAQs," "Term Insurance," "Permanent Insurance," "Long Term Care Insurance Fact Sheet."

America's Health Insurance Plans: "Supplemental Coverage."

AARP: "Understanding Long Term Care Insurance."

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