Life is full of surprises, some more pleasant than others. While most people plan for the expected—buying a home or saving for retirement—it’s easy to overlook the unanticipated financial burdens that can arrive at the most inconvenient times. Sudden medical emergencies, unexpected illnesses, and life-altering events, like divorce, can impose significant economic strain.
Establishing a robust savings strategy can cushion the impact of unforeseen expenses. Understanding and planning for these potential challenges helps build a financial buffer to safeguard your future against life’s unpredictable twists and turns.
Unexpected illnesses and injuries are a common cause of financial burden. The U.S. Centers for Disease Control and Prevention estimates the total cost of injuries in the U.S. to be in the trillions of dollars, including medical expenses and lost wages. According to the Kaiser Family Foundation, accidents and unexpected illnesses contribute to medical debt that can strain finances.
Life and disability insurance play a critical role in protecting your financial well-being and that of your loved ones. These types of insurance provide essential safeguards against unpredictable events that can otherwise lead to severe financial hardship.
When it comes to life and disability insurance, one size does not fit all, said Emily Kutzavitch, a licensed agent with Comparison Insurance Agency in Wexford. “I like to be very individual with people because life insurance is something that needs to be molded to their lifestyle and not just a ‘pick out of these options’ decision.”
To assess individual needs, Kutzavitch said she considers the following factors:
Number of working adults in the household
Number and ages of children in the household
Current debt obligations
Future plans and financial goals
With children, she asks what would happen if an unexpected illness, injury, or death occurs to the primary wage earner. “Can they still afford the things they’re giving their kids now with two incomes and two parents?” Women who stay at home with the children often don’t think about life insurance for themselves because they undervalue their contribution to the household. “But if something happens to her, what’s daycare going to cost? She’s saved the family a lot of money by being home with the children. So, you should consider covering that expense.”
Life insurance safeguards against two things: loss of income or debt and health. Some parents may even take out small policies on their children to protect against health issues that can cause medical debt down the road.
For adults, the sooner you get life insurance coverage, the cheaper it is, Kutzavitch said. “Life insurance is the cheapest the younger—and presumably healthier—you are. Some of the most difficult conversations I’ve had with people are when they’re in poor health and they want life insurance coverage but can no longer qualify or can’t afford the high premiums.”
Kutzavitch issued a word of caution for those who have insurance through their employer. Once they retire, they lose those benefits. “Even if you have some benefits through an employer, it never hurts to get additional private coverage to make sure all your expenses are covered.”
Term life insurance is the most affordable option, especially for younger individuals. Some companies allow you to convert them when the term is up, but not all. Kutzavitch recommended verifying if this is an option when you take out a policy.
“Insurance gets a bad rap, especially life insurance. Who wants to sit around and talk about you dying?” she said. “It’s a hard thing to talk about, but it’s something that we, as a society, have to start focusing on as a necessity. Life insurance isn’t something we’re taught about when we’re young.”
Another life event that can hit some people hard financially is divorce, said Donna Kline, a Certified Divorce Financial Analyst® and Chartered Special Needs Consultant® with HBKS Wealth Advisors in Warrendale. Kline said that according to a recent Fidelity Investments survey, 56 percent of married women leave household investment decisions to their husbands. Another 60 percent of women said they worry about having enough money for retirement, but over half of them also said they were uncomfortable discussing money.
“While it may be uncomfortable to talk about money for many women, it is simply imperative that they do so,” she said, noting that half of all marriages in the U.S. end in divorce. “One of the smartest things women can do to protect themselves is to know what the finances of the family are. Know who the advisors are if you have one. Be involved. A lot of times people take on roles in a marriage—but you need to know about your finances if you get blindsided by divorce.”
Life insurance is a topic that often comes up during divorce proceedings, she said. Even if the supporting spouse didn’t previously have coverage, it’s not too late to make it a requirement of the divorce settlement. “The spouse requesting the coverage has to pay for it, but they can legally insure the other person,” said Kline. “You want the person who needs the insurance money to be in charge of naming the beneficiaries.”
Kline encourages women to get over the stigma that finances are too personal to discuss and get involved in managing the day-to-day finances so they’re prepared for any unexpected challenges down the road. “Get good advice now because most people don’t think about it until it’s too late,” she urged.
HBKS® Wealth Advisors is not an accounting or legal firm, and this document does not contain any accounting, tax or legal advice. If you would like accounting, tax or legal advice, please contact a qualified accountant or attorney. Insurance products are offered through HBK Sorce Insurance LLC. Investment advisory services are offered through HBK Sorce Advisory LLC, doing business as HBKS Wealth Advisors. NOT FDIC INSURED - NOT BANK GUARANTEED - MAY LOSE VALUE, INCLUDING LOSS OF PRINCIPAL -
NOT INSURED BY ANY STATE OR FEDERAL AGENCY.
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