Life insurance, disability insurance, long-term care insurance—if you are like most people, when your insurance agent starts talking about coverage you ought to consider, all you can think about is what it’s going to cost you. And even though it may seem like the economy is getting better, many people are still struggling with the impact the recession has had on their budget and what expenses they can put off until tomorrow.
According to the 2013 Insurance Barometer Study, conducted by LIFE and LIMRA the majority of consumers are concerned about having enough money for a comfortable retirement, with paying for long-term care and medical expenses next in line in terms of worries—all legitimate issues.
At the same time, it can be challenging to find the money to insure against a possible future event such as a major 
illness or debilitating accident when you’re facing real expenses or dealing with an insufficient income right now. In situations like that, it can be tempting to metaphorically cross your fingers and hope for the best, putting insurance on the “deal with it later” list. But before you choose that option, you need to know the real cost of being uninsured.
Life Insurance
Imagine that you were to die today. Would your family be able to pay your final expenses and continue to meet ongoing living expenses without your income? Or, if you are a stay-at-home parent, would your partner be able to afford to pay someone to perform all the duties and responsibilities you handled? What about long-term plans—will your children be able to attend college or your spouse retire as planned? With adequate life insurance, your family will be provided for when you are no longer there.
And, depending on the type of policy you choose and the option added to the plan, your insurance can be increasing in value or even, in the case of a terminal illness, provide funds to pay bills even before you die, relieving you and your family of at least one major worry.
Worried about the cost of insurance? While the vast majority of underinsured middle-income consumers include cost as one of the reasons for not purchasing life insurance, even when they believe they need it, the reality is that most people grossly overestimate how much a policy premium would be. For example, a 20-year, $250,000 level-term life policy for a healthy 30-year-old has an actual yearly premium cost of $150. Those surveyed estimated the same coverage at $350 to $500.
Disability Insurance
You don’t need disability insurance, you think. After all, isn’t that what Worker’s Compensation is for? Yes — and no. If the injury occurs on the job, then Worker’s Comp does come into play. However, only 5% of disability claims are work-related—and, according to the Council for Disability Awareness, approximately 90% of disabilities are caused by illnesses rather than accidents.
For example, if you are diagnosed with cancer or sustain major injuries in an auto accident and are unable to work, what will be the source of your income? How will you cover your living expenses and the additional cost of medical care? In this scenario, half of working Americans couldn’t make it one month before experiencing financial difficulties and nearly one fourth wouldn’t make it a week, according to a LIFE study. With disability insurance, however, you would have a source of replacement income to cover costs until you’re able to return to work. Fortunately, there are several options for getting disability insurance coverage.
Long-Term Care Insurance
We’d like to think that we will be able to live life on our own terms until it’s time to go, but the reality is that two-thirds of people will actually need some type of long-term care, either in their homes or at a facility. Where will the money come from if you fall into that majority? From Medicare or your existing health insurance? Not likely, since health insurance only pays for doctor and hospital bills, Medicare covers only short-term skilled nursing home care, and Medicaid only comes into play if your assets are very limited.
Will your savings be able to cover the expense? A home health aide three days a week will cost more than $20,000 a year and full-time nursing home care can be over $78,000 annually.
Maybe you think long-term care is something only the elderly have to worry about. But anyone at any age can suffer from an accident or debilitating injury that requires long-term care. As a matter of fact, 40 percent of patients receiving long-term care are under age 65.
For a comprehensive look at what long-term care insurance contact your agent who specializes in long-term care insurance.
The Bottom Line
There are a lot of factors to weigh when purchasing insurance, but be certain to have all the facts before making a decision. As you can see, both buying insurance and not buying insurance comes at a price. Be sure you know what the cost is—short-term and long-term.