Financing Disaster: How Much Insurance Is Enough?

July 21, 2008.

These days, you can insure everything from your pet to your daughter's honeymoon. When it comes to daily living, there is so much to insure and the policies are difficult to understand.

When making choices to protect yourself and your family, the subject of insurance can be overwhelming, says Frank N. Darras, the nation's leading disability and Long-Term Care insurance lawyer. At some point, you have to decide how much is enough.

"Life, Disability, Long-Term Care, Critical Illness and Mortgage insurance policies promise to pay the bills, should the unthinkable happen. It's important to balance 'financing disaster' against winding up 'in the premium paying poor house'," says Darras.

Comparing the features and benefits of different policies is exhausting and most people aren't able to decipher the fine print. The twists and turns of policies can wear out even the savviest decision maker.

Darras offers these tips:

  • Calculate your debt and ongoing financial obligations.
  • Life insurance usually covers those obligations and takes into consideration your income today and future value of that income.
  • Disability insurance is varied, complicated and often wrongfully denied. Ensure you are insuring your most important asset "your ability to earn" in what you are specifically trained to do. Buy your own individual "own-occupation" policy in addition to your company-sponsored plan, this way, you're truly protected.
  • Long-Term Care is usually purchased in your 50s, for elder care, unless there is a family history of devastating disease.
  • Critical Illness is the same, unless family history dictates someone may become critically ill, it may not be the best use of your hard earned dollars.
  • If the debt on your home is covered in your life insurance policy, Mortgage insurance shouldn't be necessary.

"Regardless of the insurance policy you're shopping for, stick with it so you understand what you bought and how to access your benefits. Hard work and smart shopping will protect your family and give you peace of mind. When the policy arrives, carefully read it and make sure what you were promised is in your policy," says Darras.

Remember; never buy a policy from a company you don't recognize. What good are cheap premiums if the company won't be in business in 20 years?