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The three parts you need to build your insurance safety net

Just like a circus high wire walker has a safety net to prepare for the worst or the unexpected, having a financial safety net is important for your family’s well-being.

It is important to be properly protected through adequate insurance policies so your unexpected surprises do not cause unnecessary financial hardship.

You are working hard to build a good life for you and your family, so it is necessary to plan for emergencies and build a safety net. According to the accredited financial coaches at Foresters Everyday Money, there are three insurance types that are critical to your financial well-being: life insurance, health insurance and disability insurance.

Life Insurance

Anyone who has someone dependent on them financially should consider a life insurance policy. Life insurance provides you the peace of mind that if something happens to you, your loved ones will be taken care of. When you are gone you want to make sure that those who depend on you have enough money to produce future income or replace the income you would have provided.

Also read: Why your workplace life insurance plan just isn’t enough

There are lots of options with life insurance policies – some that build cash value and some that allow for higher coverage during critical times of life. It’s best to find a trusted insurance representative who can explain the various options and help you choose the type that’s best for you.

Health Insurance

Do you have $7,500 to spend on a broken leg?1 That’s how much it can cost without insurance. Health insurance is significant in ensuring your savings accounts are not wiped out due to a medical condition or emergency. According to, a 3-day hospital stay may cost $30,000 or more.1

Health insurance provides you with preventive care and if you become sick or hurt, health insurance cab cover treating illness and accidents, and may protect you from paying high medical costs.

Disability Insurance

Do you have enough financial assets to retire today if you wanted to? Most people are not ready for retirement, and your ability to earn money is the most significant way you will meet your retirement goals.

But what if you’re unable to earn income because of illness or injury? What would you do? A tragedy could wipe out your financial savings and ruin you and your family’s financial plans.

Also read: Procrastination solutions: Getting started with life insurance

Adequate disability insurance will protect you and your family by replacing a portion of your income if you become ill or injured. Depending on your policy, it may replace up to 70% of your current income.

Short-term disability insurance provides benefits from the eighth day of disability through six months of disability. Long-term disability insurance will generally cover you after the first six months of a disability and continue to pay benefits up until age 65!

Consider what you would do if you could not work. How long could you live off of your current savings? You do not want to use retirement savings since you will need that later.

Disability insurance provides you the peace of mind that you will be taken care of in the event of an unfortunate situation.

It is normal for your needs to change so re-evaluate your situation and goals regularly. Consider speaking with a trusted financial advisor to review your financial situation on an annual basis, or after any life-changing event.

Also read: 5 Tips for your first meeting with a potential life insurance agent or advisor

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Michelle Budzien

Michelle Budzien is an Accredited Financial Counselor for Foresters Everyday Money, providing unbiased financial coaching and education with the goal of improving the financial well-being of Foresters members. Michelle enjoys writing about all aspects of personal finance such as budgeting tips and tools, debt management, understanding credit, analyzing future needs, and industry trends.