This is the fourth week of Back to the Basics. Saving was covered in last week's blog. Before that, we covered budgeting and debt management. Life insurance, investing, and retirement planning are the topics we still need to address. You may not realize this, but these subjects are all connected. If you are in debt, you can't save, and a budget helps you control your spending so you can save. If you save, you have the funds to purchase life insurance and have an emergency fund. You can then start funding your retirement by investing in a company-sponsored plan, such as a 401(k), or with a Dixon Financial Group, LLC LPL financial advisor.
By now, you have identified your debt, created a budget, and have the fundamentals of saving and you are working towards freeing up funds so you can afford to protect yourself and your family. Read on to learn more about how insurance fits into this picture.
Financial planning is the process of managing your money to achieve your financial goals. It includes setting goals, budgeting, saving, investing, and protecting assets. Life, long-term care, and disability insurance are all essential components of financial planning. Do you have a big enough UMBRELLA to protect you and your family?
Life insurance provides financial protection for your loved ones in the event of your death. It can help pay for funeral expenses, outstanding debts, and living expenses for your family. There are two main types of life insurance: term life insurance and permanent life insurance. Term life insurance provides coverage for a specific period, such as 20 or 30 years. Permanent life insurance provides lifelong coverage and builds cash value over time.
Long-term care insurance helps pay for the cost of long-term care, such as nursing home care or home health care. Long-term care is expensive, and many people do not have the resources to pay for it out of pocket. Long-term care insurance can help you protect your assets and ensure that you have the care you need if you need it.
Disability insurance provides income replacement if you become disabled and unable to work. Disability insurance can help you pay your bills, make mortgage payments, and maintain your living standard if you cannot work due to an illness or injury. There are two main types of disability insurance: short-term disability insurance and long-term disability insurance. Short-term disability insurance provides coverage for a short time, such as three to six months. Long-term disability insurance provides coverage for a more extended period, such as two to five years.
Life, long-term care, and disability insurance are all necessary financial tools that can help you protect your loved ones and your financial future. If you are still determining whether you need these types of insurance, you should talk to a financial advisor.
Here are some reasons why you might need life insurance:
- To provide financial support for your loved ones if you die.
- To pay off debts, such as a mortgage or student loans.
- To cover funeral expenses.
- To leave a legacy to your loved ones.
Here are some reasons why you might need long-term care insurance:
- To pay for the cost of long-term care, such as nursing home care or home health care.
- To protect your assets from being depleted by the cost of long-term care.
- To maintain your standard of living if you cannot work due to a long-term illness or disability.
Here are some reasons why you might need disability insurance:
- To replace your income if you become disabled and unable to work.
- To pay your bills, make mortgage payments, and maintain your standard of living if you cannot work due to an illness or injury.
- To protect your job and your career if you become disabled.
Suppose you are considering purchasing life, long-term care, or disability insurance. In that case, speaking with a Dixon Financial Group, LLC LPL financial advisor to determine which type of insurance is right for you and your needs is essential.
The Dixon Financial Group Team is here to help; we welcome your questions.
*We hope the topics of debt management, budgeting, saving, and insurance have been helpful; next week, we will discuss the ins and outs of investing.
David S. Dixon, CFP®
Jacob S. Bierstedt, CFP®, ChFC®