The truth is, everyone hates insurance. Another reality that is unfortunately true: we all need it!
I’ve had some of those days when working on my budget, I was looking for expenses I could cut and thought of all my insurance policies: after all, how do I know if something is going to happen to me? I could save this money and self insure. As it turns out, I was wrong.
Knowing my luck, the day I drop my insurance something will happen that will make me regret it.
After doing a lot of research, I realized: even if I do save 10% of my income and then I can’t work for a year due to any medical reasons, one year of illness will wipe out 10 years of savings! Plus, I’ll have medical expenses on top of what I will need just to survive: food, bills, housing expenses.
Insurance was born from the need of finding funds in case of a catastrophic loss.
In other words, it helps eliminate risks, or at least the risk of financial loss. This is easily observed in case of a loss of a house, auto, boat, business. Of course, there is no financial replacement for a loved one’s life, but the disappearance of a parent’s income for example, will strongly affect a child’s chance for good education, plus the insurance proceeds can help pay for final expenses, funeral, probate, estate taxes, etc.
Another risk that should be insured, but very few people think about: loss of future income.
You may think that health insurance will be sufficient if you get sick or hurt, but think again: who gets paid by health insurance? Your doctors, the hospitals, the pharmacy, the ambulance… But who pays YOU? What if you can’t work for a lengthy period of time? Who will continue to pay your bills? Who will put food on your table?
What are the odds, anyway? It won’t happen to me!
Odds are 1 in 3 that any of us will be hit by an illness or accident which will affect our capability to work for 3 months or more.
Look at the American Cancer Society statistics: 1 in 2 (males) and 1 in 3 (females) will get diagnosed with some form of cancer in their lifetime, in the US. American Heart Association warns: Every year about 715,000 Americans have a heart attack. That means the odds are 1 in 4 that you will be diagnosed with a heart disease during your lifetime.
How will an illness or accident affect one’s lifestyle?
Think of someone you know, who was diagnosed with a critical disease or had a serious accident within the last 5 to 10 years? Did they plan on that? How did the illness affect their life? Were they prepared? Did they wish they were better prepared?
While you should try to have a healthy lifestyle and cut your chances of a critical disease, accidents can also happen when we least expect it. What people forget to realize is, when someone’s health is affected, their financial situation is terribly shaken as well! I’ve seen so many families struggling financially because they failed to plan for a catastrophic health issue that may affect a family member, especially one of the breadwinners.
How can I protect myself from financial ruin, if my health is at risk?
There are few financial protection plans that can pay you and help pay for your bills, housing, food and continue your goals, even if you can’t work due to an illness or injury:
- Disability insurance – will pay a monthly check to replace your income lost due to sickness or accident. Monthly benefits can start at $500 per month, up to $50,000 per month or more for high income earners.
- Critical Illness and Cancer Insurance – will pay a lump sum after the first diagnosis of a critical illness: heart attack, cancer, stroke, Alzheimer Disease, major burns, etc. Benefits up to $500,000 lump sum are available. The money received can be used for any purpose you may seem fit, from paying off debt, income loss replacement, or any alternative treatments not covered by your health insurance.
- Life insurance with living benefits – will not only protect your life (it actually protects your family in case of premature death), but can also include additional benefits payable in case of a disability or critical illness. These hybrid policies are normally cheaper than getting separate policies for each risk, but the benefits may be limited.
- Mortgage Insurance Protection – will pay your mortgage if you get sick or hurt, or even if you lose your job.
- Hospital indemnity plans can complement a high deductible major medical health insurance plan.
What if I do get insurance and nothing happens?