Beyond the Basics: Insurance Coverages Many People Overlook
Beyond the Basics: Insurance Coverages Many People Overlook
Most people understand the importance of having the core types of insurance in place—health insurance, auto insurance, homeowners insurance, and life insurance. These policies protect against the most common risks, and for many households they form the foundation of a solid financial plan.
However, there are several other types of protection that often get overlooked. These coverages are less talked about, but in many cases, they protect against risks that could be even more financially damaging. Disability insurance, long-term care insurance, umbrella liability coverage, and identity theft insurance are four examples that deserve serious consideration.
Below is a high-level overview of each, why they matter, and who should consider them.
Disability Insurance — Protecting Your Income
For most working people, their ability to earn an income is their single greatest financial asset. Typically, people think of loss of income due to death, which they cover with life insurance. However, loss of income due to disability is often overlooked, even though the data tells us over and over again that it's far more likely to occur than premature death.
Disability insurance replaces a portion of your income if you are unable to work due to illness or injury. There are two main types:
Short-term disability
Typically covers a few weeks to several months
Often provided by employers
Usually replaces 50–70% of income
Long-term disability (LTD)
Covers disabilities lasting longer than a few months
May continue to retirement age depending on the policy
Often replaces 50–60% of income
Long-term disability insurance is especially important because serious illnesses and injuries often last longer than people expect. Back injuries, cancer, neurological conditions, and mental health issues are among the most common causes of long-term disability.
Many people assume Social Security Disability will cover them, but qualifying is difficult, benefits are limited, and the process can take years.
Often times your Employer can help cover disability insurance, so check with your human resources department first.
Do you need both short term and long term? If it’s within your budget, it won’t hurt; but long term is by far the more important of the two. Short term disability is exactly that – short term. Meaning you can get your income back in a short period of time, and use your cash reserves in the meantime. Long term disability is what could lead to financial ruin, and that is what needs to be protected against.
Long-Term Care Insurance — Protecting Against the Cost of Aging
This may be the least enjoyable risk to think about. No one wants to imagine themselves needing care for the most basic of life necessities. I certainly don’t want to imagine it.
Nevertheless, the data tells us over two thirds of seniors will need some form of long term care at some point in their life. This care is not cheap, and that’s where LTC insurance comes in.
Long-term care insurance helps cover the cost of assistance with daily living activities later in life. This may include help with bathing, dressing, eating, mobility, or memory care.
Examples of long-term care services include:
Nursing home care
Assisted living facilities
In-home care
Adult day care
Memory care for dementia or Alzheimer’s
Costs can be significant. In many parts of the country, nursing home care can exceed $100,000 per year, and even part-time in-home care can add up quickly.
Many people assume Medicare will cover long-term care, but Medicare only covers limited short-term rehabilitation after a hospital stay. It does not cover ongoing custodial care.
Long-term care insurance can help protect:
Retirement savings
Investment accounts
Home equity
Assets intended for heirs
This type of coverage is typically purchased in your 50s or early 60s, when premiums are more affordable and health underwriting is easier.
Not everyone needs long-term care insurance, but it is worth considering for people who:
Have significant assets to protect
Do not want to rely on family for care
Want to preserve wealth for a spouse or children
Are concerned about the rising cost of healthcare in retirement
Umbrella Insurance — Extra Liability Protection
Umbrella insurance provides additional liability coverage beyond what your home and auto policies cover.
For example, your auto insurance might cover $250,000 or $500,000 of liability, but a serious accident or lawsuit could easily exceed that amount. Umbrella coverage sits on top of those policies and provides extra protection.
Umbrella policies typically start at $1 million of coverage and can go much higher.
Situations where umbrella insurance may apply include:
A serious car accident with injuries
Someone getting hurt on your property
A lawsuit related to rental property
Defamation or personal liability claims
Accidents involving teenage drivers
In today’s environment, lawsuits are more common and settlements can be very large. Even people with moderate wealth can become targets if they have assets, income, or future earning potential.
Umbrella insurance is often surprisingly affordable relative to the amount of coverage it provides, especially compared to the cost of defending a lawsuit out of pocket.
People who should strongly consider umbrella coverage include:
Homeowners
High-income earners
Families with teenage drivers
Landlords
Anyone with significant savings or investments
In many cases, umbrella insurance is one of the most cost-effective ways to reduce financial risk.
Identity Theft Insurance — Protection in a Digital World
Identity theft and cybercrime have become increasingly common, and the financial damage can go beyond fraudulent charges. Stolen personal information can lead to loans, credit accounts, tax fraud, and legal issues that take months or even years to resolve.
Identity theft insurance typically does not just reimburse stolen money. Instead, it often provides services such as:
Credit monitoring
Fraud alerts
Identity restoration assistance
Legal expense reimbursement
Lost wage reimbursement for time spent fixing issues
Many policies also include specialists who help navigate the recovery process, which can be one of the most valuable parts of the coverage.
Identity theft protection may be especially helpful for people who:
Have strong credit and significant financial accounts
Frequently shop or bank online
Own a business
Have children whose identities could be used fraudulently
Want help resolving issues if identity theft occurs
Some coverage may already be included through homeowners insurance, employer benefits, or financial institutions, but the level of protection varies widely.
Given how much personal information exists online today, identity theft protection is becoming a more common part of a comprehensive risk management plan.
The Big Picture: Risk Management Is More Than Just Basic Insurance
A well-designed financial plan is not only about growing wealth — it is also about protecting it.
Basic insurance covers the most common risks, but the less obvious risks are often the ones that cause the most financial damage. A long-term disability, a major lawsuit, extended healthcare needs, or identity theft can undo years of progress if the proper protection is not in place.
Disability insurance protects your income.
Long-term care insurance protects your retirement savings.
Umbrella insurance protects your assets from lawsuits.
Identity theft insurance protects your financial identity.
Not everyone needs every type of coverage, but reviewing these areas periodically can help ensure that your protection keeps up as your income, assets, and responsibilities grow.
Taking the time to address these overlooked risks can make the difference between a temporary setback and a permanent financial problem.
As always, feel free to reach out to me directly for help.
Everest Wealth Advisors is a wealth advisory firm that helps individuals, families, and business’s navigate complex financial decisions through personalized, goal based planning and disciplined investment strategies.
Ryan Page, CFP®, MBA®
Office & Text:720-826-1092
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent.
