Having a strategy to deal with uncontrollable events such as death, disability, critical illness and general personal health is an integral part of financial planning. Insurance allows you and your family to have more comfort should an uncontrollable event occur. Insurance is generally classified into two broad categories, they are life insurance and living benifits.
Creditor Protection, Avoiding Probate and Public Record
Insurance products can be a very important component of both risk management strategies and planning. In many cases insurance products can be structured in a manner so that proceeds bypass the estate and avoid probate fees. Your Will determines how your estate is distributed. Wills which are probated become a matter of public record. As insurance products bypass your estate, the proceeds avoid public record and confidentiality is assured.
Life Insurance
Nearly all of us insure our house and vehicle. The house may provide your family a place to live and the vehicle a means of transportation. Do you insure your life? Your life provides a means of earning income to support your family, the house your family lives in and the vehicle you drive. If only one member of the family works (or is the primary provider), it is important to look at the financial outcome if that individual were to become incapacitated or pass away. For a couple with dependent children it may be difficult for the surviving parent to replace the lost income resulting in immediate hardship. Other individuals use life insurance as a means to enhance their estate, cover taxes upon death, or to make a significant gift to charity.
Living Benefits
Becoming disabled or suffering a critical illness are some things you can't control but can be planned for. Long-term care is another concern that many individuals have as they approach retirement. Living benefit insurance is designed to manage the financial risk of disability, critical illness and long-term care. This types of insurance enables the person that has purchased the policy to collect the insurance while living. Ensuring that you have the necessary resources to deal with an uncontrollable event is a component of all financial plans. Without this coverage many individuals are forced to sell their home and/or deplete their retirement savings prematurely.
