(StatePoint) It’s never fun to think about the possibility of getting sick or hurt, losing a home, needing extended medical care, or even dying, but these are extremely important topics to confront when planning your financial future.

Experts agree that sound financial planning usually involves obtaining some type of insurance. Insurance provides payment due to loss of life, income, assets, or future earning potential.

Here are four types of insurance to consider including in your financial plan.

• Life insurance. Experts agree that if your family depends on your income, you should get a life insurance policy. There are a few different types of life insurance, but whole life and term life are the most common. A term policy provides coverage for a specific length of time—typically between 10 and 30 years—and is a good option for those who only need a safety net until they retire. A whole life policy provides coverage as long as the premium is paid, and is a better choice if you need life insurance to last the rest of your life. Many financial advisors and insurance companies recommend purchasing enough life insurance to cover six to 10 times your annual salary.

• Disability insurance. This type of insurance basically protects your paycheck if you get hurt and cannot work. You may not need short-term disability insurance if you have enough emergency savings stashed away, but most financial advisors recommend purchasing long-term disability insurance. Your employer may offer group disability insurance, which will typically replace up to 60% of your income, or a maximum of $5,000 to $15,000 per month. You could also consider an individual disability policy. These policies usually replace 60%-65% of your income and—unlike employer-sponsored disability policies—they are portable, meaning you can keep your insurance no matter where you work.

• Homeowners insurance. There are two types of homeowners insurance to consider: basic homeowners insurance and homeowners liability insurance, which kicks in if someone is injured on your property and decides to sue. Experts advise that homeowners have a basic policy that covers the full cost of rebuilding their home, while a homeowners liability policy should cover at least $300,000.

• Car insurance. If you cause a car accident and injure someone, you could be sued for damages and medical expenses. Car insurance will help you cover these costs. It is generally recommended that you get a policy with liability limits of at least $300,000 per person, $300,000 per accident and $100,000 for property damage.

A Certified Financial Planner professional is a great resource to help clarify why coverage may or may not be necessary and what insurance options are available. To find a CFP professional near you, visit LetsMakeaAPlan.org.

Developing a comprehensive financial plan will help you map out an insurance strategy that efficiently and effectively covers your basic needs and financial goals.


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