Why Is It Important To Have Life Insurance and Disability Insurance Protection?

Life insurance is the foundation of family protection. Before you begin investing, you must ensure that you have adequate insurance in place to protect you and your family, an emergency fund that is adequate to meet you and your family's needs and that you have paid off all high interest rate credit cards.

Everyone should ensure that they have an adequate disability insurance policy, adequate life insurance and health insurance policy. Everyone protects their assets such as their home and auto with insurance, however, they forget that their earning potential is what allows them to keep and maintain those assets. Many individuals do not realize the financial nightmare that is possible if they become disabled. According to the US Census Bureau, you have a one in five chance of becoming disabled. A study released by the census bureau in 2006 revealed that 152 million people between the ages of 21 and 64 - which is their prime working age, report some form of disability. The American Council of Life insurers (ACLI) states that a person age 35 is six times more likely to become disabled than die before he or she reaches the age of 65. These statistics show that there is a definite need for a long term disability policy as you are more likely to become disabled during your prime working years.

If you became ill and are unable to work for two or three months, do you have enough funds to cover your living expenses during that time. If you do not have adequate funds then you should have a short term disability policy which would provide the funds to help you while you recover. It pays a percentage of your salary if you become temporarily disabled, that is you are not able to work for a short period of time while you recover, It typically provides 50, 60 or 66 2/3 percent for 13 to 26 weeks. These policies have a cap which is a maximum benefit amount per month.

Your life insurance policy will pay a specified amount of money, either a lump sum or a lump sum with monthly payments to a designated beneficiary or beneficiaries when the insured dies. Some of these policies allow you to take out funds from the policy if you are terminally ill to provide for your care. However, this reduces the amount of death benefit that is available to your beneficiaries.