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Do You Have Insurance? Great. Next Question: Do You Have Enough?
August 24, 2016
Insurance fundamentals: Know your contracts & your coverage
Got insurance? If you have a job with a successful employer, chances are you do.
Most likely, you're carrying one – or all – of the types below.
Types of insurance
Employer-provided life insurance
This is exactly what the name implies: life insurance provided by your employer. Many U.S. companies have long offered it as part of their benefit packages. One point to note: While there is typically little or no cost to you, an employer-provided life insurance might not be adequate to take care of your family in case something happens to you.
Term and Permanent Life Insurance
Term insurance covers a specified period of time, anywhere from a year to the time you reach age 65 or 70, depending on the contract. Such a contract can provide a sense of assurance, especially if you've started a family. You know they'll be covered if you pass away while you're still working. And if you buy term insurance early in your career, the premiums can be extremely affordable.
You may want to consider a cash value, or a permanent, life insurance contract which can provide protection and a potential way to save. These types of contracts provide benefits just like term insurance upon a premature death, but they also can offer a way to accumulate income-tax free cash value.1 There are even blends of term and permanent life insurance available to meet differing needs.
Disability insurance can fill a critical need. In a nutshell, disability insurance covers a portion of your salary in case you become disabled and unable to work. In fact, the U.S. Social Security Administration estimates that 25% of today's 20-year-olds will become disabled before they retire.
Questions to ask about your insurance coverage
Having insurance is a smart start. Still, it's only a start. Perhaps the more important question is: Do you have enough?
Start with employer-provided life insurance. How much would your loved ones receive if you were to die? Chances are, it would cover your funeral expenses and a few other bills. But what about the mortgage or other major debts?
Here's another thing to keep in mind: If you leave your current employer, in most cases, you can't take the insurance with you.
What about your own term life contract? To ensure you have enough coverage, consider your family's unique situation. If something were to happen to you, would your insurance cover most, if not all, of the expenses they'd face?
There are also a few specifics you may want to think about.
Specific insurance points to consider
- How much is left on your mortgage?
- What about car payments?
- Is your beneficiary still paying off student loan debt?
Have you looked into converting term insurance to permanent?
Those are just some of the considerations you need to weigh as you determine what kind (or kinds) of coverage you need, and how much.
Tools to help you figure out your insurance needs
Life happens – count on it! Knowing what your insurance needs are can help you prepare for whatever life may bring you. These free calculators can help you get started:
Your Thrivent Financial representative can help you factor these and other variables to determine how much coverage you need – for today and for the future.
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1 Thrivent Financial representatives and employees cannot provide legal, accounting, or tax advice or services. Work with your Thrivent Financial representative, and as appropriate, your attorney and/or tax professional for additional information.