By Joanne Hoffer, M.B.A.

If you are in a situation where somebody depends on you for caregiving, it might be time to reconsider your insurance needs. If something were to happen to you, will your family be provided for? Would your death or disability leave anyone in a financial bind?

As a caregiver, you may already recognize the importance of purchasing insurance before medical problems occur. It is important to consider all types of insurance options while you are healthy. Think of insurance as a preventative. You never know what could happen, so it is best to be prepared.

This article discusses some of the more common forms of insurance. Be sure to speak with an insurance professional near you for more information on the most appropriate needs for you and your family.

Disability Insurance

Disability insurance is designed to cover a portion of your lost income if you are not able to work.  This is one of the most important types of insurance you can have. 30% of all employees will file a disability claim sometime between the ages of 20-65.  This is why disability premiums can be so expensive, but also why disability insurance is important.  

There are two main types of disability insurance: short term, which covers up to six months, and long term, which usually covers from six months post disability through age 65.  

Life Insurance

Life insurance provides cash for your beneficiaries upon your death. 

There are two main types of life insurance:

• Term life is the most basic and common type of life insurance.  It pays a benefit if you should die during the specified term (1 year, 5 year, 10 year, etc.).
  
• Whole (or “cash value”) is an insurance savings plan. You make payments over time and, assuming you keep up the policy, you build up value over time and can usually withdraw money in various ways over time, especially post retirement.  Whole life insurance is usually more expensive and complicated than term life. 

Long-Term-Care Insurance

Long-term-care insurance is designed for medical conditions that require long-term medication, rehabilitation, nursing care, or care-oriented diseases that may not have a cure. While medical insurance typically is designed to cover doctor’s visits, hospital visits, some prescription medications, and general medical care, many insurance plans will not cover daily living needs,  physical therapy needs, around-the-clock nursing care, or cognitive impairment therapy (such as cognitive therapy for those with Alzheimer’s Disease).

Long-term-care insurance may be a supplement to Disability insurance coverage and Medical insurance coverage.  It may be particularly useful for those who may have long-term, untreatable conditions that require constant care.

What type of insurance do I need and how much?

The type and amount of insurance needed varies depending on your financial and medical situation. However, you should also plan for the future. You may be perfectly healthy now, but circumstances could change. Speak with a trusted financial advisor to help select the right plans for you and your family. You may also want to speak with a trusted healthcare professional, such as your nurse or doctor, about recommended plans.

If you have an accountant or lawyer whom you trust, you may want their advice as well.

You may also want to buy a book to educate yourself on different types of insurance. One good book is Insurance for Dummies (Wiley, 2001). Consumer Reports is another good source of information.

Use the Web to Research

Shop around for insurance and be sure to compare different insurance companies. Once you start using online calculators, you will begin to see which variables are most important in shifting your monthly cost.  The Websites that ask for the most detailed health and lifestyle information may be able to give you the most accurate quotes.  Just be sure not to provide too much personal information (such as your Social Security number) or your phone number. And be aware that many of these “insurance calculators” online are sponsored by insurance companies.

Unless you want your phone to be ringing off the hook with calls from insurance brokers, do not enter your name or phone number online. Many sites will give you quotes without entering this information. To play it safe, you might want to use Websites for your basic research—and make a phone call to the insurance company to speak directly with a representative when you are ready to purchase.

Find a Good Broker

Another way of finding insurance is through a trusted insurance broker. Ask friends, family, and neighbors for recommendations, and meet with multiple brokers. An initial meeting is usually free (ask to be sure). Be sure to ask any brokers you meet how many policies he or she writes a year, how he or she gets paid, and why he or she recommends specific policies. You may want to find somebody who writes policies for more than one insurance company so they can help you comparison shop. 

Always ask a broker how long he or she has been in the business, and what his or her certifications are. If the agent is a CLU (Chartered Life Underwriter), a ChFC (Chartered Financial Consultant), or a CFP (Certified Financial Planner) it means they have passed a series of exams over several years. Your broker should be willing to explain everything to you, including any terms you might not understand.  Lastly, your broker should not pressure you to make a quick decision.  You should have time to look over all policies and compare them with each other.

Check With the Better Business Bureau

For a very small fee (or no fee at all), you can check to see if your insurance agency has any complaints filed against them at the Better Business Bureau.  You can search online and enter the phone number of the agency.

Get Several Quotes

Be sure to compare coverage levels and limitations, benefits, exclusions, and premiums from at least three different insurance companies.  Also, be sure to check with your employer, unions, or companies like USAA (if you’ve served in the military).  The AARP also offers several types of insurance.

Make Sure Your Insurer Is Financially Stable

An insurance policy is not worth the paper it’s written on if the company is not around when it’s time to file a claim.  Make sure your insurance company is financially sound.

Check ratings with the following agencies before you purchase:

Pay Your Premiums

Once you’ve done all the work and own a new insurance policy, make sure you pay your premiums on time!  If your payments can be deducted from your paycheck or directly from your bank account, this is one way to ensure you won’t miss a payment.  Otherwise, mark a calendar with payment dates in advance for the year. 

Shopping for insurance can be challenging, but keep in mind that a bit of diligence pays off. You are the customer!  Ask insurance representatives and brokers anything that comes to mind.

If you don’t get the answers you want, find another company or agent.

Having the insurance you need is one less thing to worry about when taking care of your loved ones.