Preserving Your Savings With Insurance
No matter what stage of your financial life you’re currently in, saving money isn’t always easy. An effective savings plan involves more than just a budget and goals; it involves a disciplined attitude toward keeping your finances on track, working toward reaching goals, and avoiding impulse buys when your savings start to accumulate. One of the things that you’ll most want to do when you start saving money is protect your accumulating cash from the unexpected. Insurance not only protects your savings but helps preserve it for its intended use.
Every time you spend money, you’re making an investment. Whether you buy a house, a car or another big-ticket item, instead of putting money into your savings account, you’re spending it on an item that you expect to get a return out of. You’re expect a return either though the appreciation of the asset value or from the actual usage of the item and its ability to enhance your quality of life.
When one of these items becomes damaged during an insurable incident and you don’t have insurance, you must take money out of your savings in order to replace it. Not only does this reduce your savings but it also reduces any asset appreciation that you might have gotten from the item as you effectively double your cost basis. With proper insurance, you can ensure that you don’t have to pay to replace your property when it becomes damaged due to a covered peril. Instead you can rely on your insurance company to pay replacement or actual value for the item.
Creating a Legacy
At least a portion of your savings is probably intended to go on far beyond your own life to create a legacy for your heirs. They may use this legacy to start their own families, to go to college or to pay off the taxes that your estate prompts. Saving money to create a legacy is not easy for many reasons, such as:
Within the confines of your current and future salary, it may be extremely difficult to find enough money set aside to leave the kind of legacy you want your heirs to have.
Your desire to create a legacy could impact your ability to live a comfortable retirement as you may attempt to spend less during retirement in order to ensure that there is something left behind for your heirs.
A life insurance policy is the perfect legacy planning tool as it creates a set of funds exclusively for legacy planning. This creates a more affordable way to leave the legacy you want while still allowing you to save money for all your other savings goals.
Maintaining an Income
How far off track would your savings plan get if you no longer had income during a long- or short-term disability? Not only would your ability to save be interrupted by your lack of an income while you are disabled but it would also be very difficult to get back on track after you recovered and were able to work again. Long- and short-term disability insurance policies help you maintain an income even while an injury interrupts your ability to earn a living. Receiving benefits from a disability policy also reduces the likelihood that you’ll need to dip into your savings account. While you may not be able to make continued contributions while living on disability insurance benefits, you will at least keep your savings segregated from the money that you need to spend in order to support yourself and your family.
Guarding against Liabilities
It’s often said that we live in a litigious society. One look around your home, yard and even your vehicle and you can probably find many different potential liabilities. Your exposure to liabilities is ever present and can result in expensive lawsuits for both damages and medical expenses should someone become injured on your property. Liability insurance through home insurance policies, auto insurance policies and umbrella policies ensures that even if you are liable for damages after an insurable event, the payment of the damages won’t come out of your savings. Instead they’ll be paid by your insurance coverage.
A well-structured insurance portfolio can be one of most powerful guardians of your savings plan. If you want to make sure that you’re covered by insurance and your savings are protected, give us a call. We can work with you to fill any insurance gaps you may have.