Answers To Your Financial Questions – Types of Insurance

Let’s Discuss Different Types of Insurance. How Do they Work?

Life insurance

Provides the beneficiaries of your life insurance policy with funds upon your death so that your assets will not need to be used to pay final expenses and estate taxes. Disability income insurance pays benefits to replace part of your earned income while you can’t work due to illness or injury so that you continue to meet your financial obligations (e.g. mortgage).

Health insurance

Pays medical expenses incurred as a result of an illness or injury, so that you do not need to use your assets to pay for them. Long-term care insurance pays for certain in-home and nursing home care expenses, preserving your assets for heirs.

Homeowners insurance

Pays for certain property damage and losses so that the property can be repaired or replaced without your having to use other assets to do so. Also covers certain liability claims.

Business/Professional insurance

 Pays for certain business losses (e.g., property damage, business interruptions, liability claims).

Automobile insurance

Pays for damage to your automobile so that you can fix or replace it. Umbrella liability insurance provides liability protection above and beyond basic coverage provided by homeowners/automobile policies.

Let’s Discuss Charitable Giving

When developing your estate plan, you can do well by doing good. Leaving money to charity rewards you in many ways. It gives you a sense of personal satisfaction. Also you can save money in estate taxes. The full amount of your charitable gift may be deducted from the value of your taxable estate.

Note: It is wise to give to charity from taxable accounts and to your family from non-taxable accounts.

1. Make an outright bequest of cash in your will to your favorite charity.

2. Name your favorite charity as a beneficiary in your IRA, retirement plan, insurance policies, or certificates. The designated gifts will be deductible for estate tax purposes and the charity does not have to pay income taxes.

Next Issue: You and Your Will – If you don’t make a will, your state will decide where your money goes.

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