Insurance Fundamentals submitted by Advantage Tax
Chances are, you own several different types of insurance. The reason for this is to transfer financial risk from yourself to an entity that is better prepared to deal with potentially huge financial liabilities, namely an insurance company. If your home burned to the ground, would you have enough money in your savings and investment accounts to rebuild it? Unlikely. That’s why you purchase homeowners insurance. Similarly, if you died tomorrow, would your family be able to maintain their same standard of living without you? Perhaps, if you have adequate life insurance coverage. That’s what insurance does. It serves as a safety net for your finances.
You set financial goals for yourself. You want a comfortable lifestyle. You’d like to live in a nice house in a good neighborhood. You want your kids to get an excellent education. Insurance helps make sure that your financial goals for your family can be achieved, even if life throws some major curveballs your way – like sustaining a major injury in a car accident, being diagnosed with a chronic health condition or dying at a young age.
To visualize how important insurance is. Imagine a pyramid. At the base is protection, laying the support for your future savings, investment & retirement. If you remove the foundation the whole pyramid will become unstable. Think of the bottom as the foundation of your financial plan. You want to make sure that no matter what twists and turns life sends your way, you’ll have the financial wherewithal to protect you and your family. This bottom part of the pyramid is comprised of assets like insurance and emergency savings.
Saving for the future is vitally important as well, but only after your basic protection needs have been met through a well conceived insurance program. Let’s say you put away a small amount of money every month for retirement. If after a few years, you were to suddenly die or become permanently disabled, would that savings be enough to take care of your family? Unfortunately in most circumstances, the answer is no. The result would cause financial and emotional strain on your family. We all would like our family members to continue their lives as normally as possible. A comprehensive coverage with sufficient payout will help the family members over this difficult period. It would provide them with the necessary funds to settle your financial obligations and to cover the loss of income you had previously generated. You can have peace of mind knowing that if you are properly insured your family can;
- Pay the Mortgage. Be it all at once or over time
- Service any existing debt including income taxes
- Maintain their current lifestyle as well as sending putting your children through college.
Unfortunately too many Americans ignore or underestimate the impact the death or disability of a breadwinner can have on a family. There is no reason not to have sufficient life insurance coverage as part of your overall financial plan. Contact Advantage Tax Group today at 330.343.6525 for an appointment. We will review your situation to make sure you have the proper plan in place.