Insurance and Your Financial Plan

File foldersPlanning for the Future

When creating your financial plan, it helps to think of your plan like building a pyramid. Before you begin building wealth, you should consider starting with a solid foundation of insurance to help protect yourself from life’s pitfalls. Once you’re adequately protected, you can begin to build your plan upward with savings and investments.

Protecting your health and lifestyle

Financial planning pyramid: Insurance, Savings, InvestmentsThe high cost of medical care – especially medical emergencies – is well known. Without insurance or adequate assets, it’s easy to find yourself with an enormous amount of medical debt.

Health insurance is so important because it helps:

  • Protect your finances
  • Protect your health
  • Improve your access to quality care
  • Shield you from unexpected medical costs

If your medical insurance is not covered by your employer, check with your state insurance department for a list of companies that offer private health insurance.

Life expectancy is increasing, but impairments resulting from chronic diseases such as diabetes or Alzheimer's may require long-term care. The cost of long-term care can be a major threat to your family's assets, quality of life and financial security. Long-term care insurance is designed to help cover these costs, and should be considered.

Protecting your income

If an interruption in your earnings would cause financial harm to you or your dependents, you need to have it adequately covered.

  • Disability insurance provides monthly income in the event that you are unable to work for an extended period of time due to a qualifying sickness or injury. Check with your employer or your state's insurance department for additional information.
  • Life insurance provides a generally income tax-free lump sum of money for your survivors in the event of your death. The appropriate amount of insurance depends on your needs and personal circumstances.

Protecting your home and possessions

Homeowner and renter policies help protect your home and its contents. The liability coverage for any property you own or rent — primary residence, vacation home or investment property — is designed to provide funds in the event you are sued for an accident connected with the property. Some natural disasters, such as floods and earthquakes, may not be covered. Check with your state insurance department for coverage against these or any other events that are not covered by your basic homeowners insurance policy.

Image: umbrella protecting home

Protecting your vehicles

Automobile, boat, motorcycle and recreational vehicle insurance helps protect you from financial loss if the vehicle is damaged or stolen, in addition to providing liability coverage if you are sued in connection with an accident.

When to revisit your insurance needs

It's generally a good idea to review how well your coverage meets your needs once a year.

If you have a change in...Make sure you have adequate
Income, or your income needs changeLife and disability insurance
Your number of dependents, such as the arrival of a child or the support of elderly parentsLife and disability insurance
Marital statusLife, medical, automobile, homeowners, long-term care insurance
Real estate holdingsProperty and excess liability ("umbrella") insurance
Valuables bought or sold (e.g., antiques, art, china, musical instruments)Homeowner's coverage
Employment statusLife, medical, disability or long-term care insurance

Additional Resources

Insurance offerings, features and regulations vary from state to state. For additional information about all types of insurance, check with the state insurance department where your live.

Life insurance products issued by TIAA-CREF Life Insurance Co., New York, NY.

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