Springfield Business Journal_2020-08-03

SPRINGFIELD BUSINESS JOURNAL · 13 AUG. 3-9, 2020 INSURANCE & BENEFITS Smart Planning 6 common insurance questions answered Insurance is one of the fundamental financial tools for any household. Most people recognize the important role of in- surance, but many are unsure about how it works. If you have questions about in- surance, you aren’t alone. As a financial adviser, I get a variety of questions about insurance. Here are six of the most com- mon: 1. I usually just renew my policies every year. Is there any need to worry about making changes? Just as your life can evolve over time, your insurance needs may change as well. Consider re- viewing your insurance coverage at least annually. This can help you determine if policies you currently own are cost effective and still a good fit for you. It also may help you evaluate if there are policies you no longer need and identify any gaps in cov- erage. 2. I have life insurance through my employee benefits program at work. Do I need additional coverage? It’s worth comparing the cost of that cover- age with other types of options available to you. Life insurance as an employee benefit isn’t always less expensive or suf- ficient to cover your entire financial situ- ation. Also, if you should leave that employ- er, your coverage will ultimately be lost. You’ll want enough protection in place to meet your family’s needs, particularly if your work circumstances change. 3. How does variable universal life differ from traditional universal life policies? Universal life policies are per- manent policies that have a savings com- ponent. In a variable policy, savings can be put to work in investments such as stocks and bonds. That creates potential to ac- cumulate more savings, but it also adds a degree of risk if your investment choices perform poorly. This may impact the premiums due or your death benefit. Some policies offer ways to lock in a guaranteed minimum death benefit. 4. What are riders, and how do I know if I should choose any? Riders are benefits you can add to your policy, usu- ally for an extra cost. With life insurance, they can range from the option to have premiums waived in certain circumstances (such as be- ing unable to work due to a disability), the right to claim an accelerated death benefit if you should become ter- minally ill, a return of premium if you don’t die within the term of the policy and even coverage for long-term care needs. Your unique cir- cumstances and priorities can help you determine if any riders are right for you. 5. What is disability income insur- ance and how does it work? This is an important form of coverage that provides a stream of income if you are unable to work for an extended period of time due to injury or illness. It is designed to replace a portion of your income to help meet your living ex- penses while you are unable to work. This can be vital not only to pay bills but also to keep your long-term financial goals on track. Policies typically include a waiting period of 90 days between the time you stop working and when income payments begin. 6. How might my insurance require- ments change later in life? You’ll want to consider different strategies as you grow older. Long-term care insurance may be worth considering when you are in your 40s or 50s to help deal with the rising costs of ex- tended care as you age. When you retire, you’ll likely no lon- ger need to main- tain disability income coverage. And, depending on your level of wealth, you may want to consider incorporating life insurance into your estate plan. Insurance is a critical component in your overall financial plan. Talk to your financial adviser and insurance special- ist to review your current coverage and determine how you might be able to up- grade it or incorporate more cost-effec- tive solutions. Paula Dougherty is a certified financial planner and private wealth adviser with Achieve Private Wealth, Ameriprise Financial Services Inc. in Springfield. She can be reached at paula.j.dougherty@ampf.com. INDUSTRY INSIGHT Paula Dougherty Just as your life can evolve over time, your insurance needs may change as well. Consider reviewing your coverage annually. At UMB, more truly means more. In today’s world, you’re managing a complex set of financial needs from risk and credit, to growth and security. When you add all of that up it means the most important thing you need is a financial partner you can trust. And, we believe our track record of successfully serving our clients for more than a century through all economic cycles speaks for itself. Member FDIC Number Relationship UMB.com/More