Basic Insurance is Usually Not Enough

Main Digest

There is a growing problem around America. The vast majority of the population is under-insured. Recent studies have shown that 3 in 4 households have very little or no insurance to cover their basic needs.

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Most people only carry liability insurance on their vehicles and basic coverage on their homes. If the average American home were to burn down we would find that most homeowners only have basic coverage.

The problem with basic coverage is that it's very limited; it usually will not cover expensive jewelry, paintings, excessive lawsuits and disasters such as floods. Basic coverage will also not account for depreciation, which will reduce the actual amount received by consumers. Consumers do not receive full replacement cost with basic insurance coverage.

In addition, life insurance and disability insurance in many households are two of the most under used forms of protection.

For example, let's use one of my clients, "John Smith."

I met John while participating in a trade show in Stamford, CT. John is 38 years old, he makes $65k per year, his wife is a homemaker, and they have two children, ages 2 and 5. John has $50,000 in group life insurance at work and told me that it's not in the family budget to buy any insurance. I found this hard to believe. I observed a late model BMW in the driveway and an expensive entertainment system in his family room. John also mentioned he has the "everything package" with the cable company.

John has made a major gaffe when it comes to protecting.

If John dies, his wife and kids would only get $50,000, which is not even enough to cover 1 year of John's salary. John's wife would likely struggle to raise their kids, not have money for college, and have to move out of the family home. Furthermore, if John were to become disabled his disability would only cover about 60% of his salary, which would also be taxable. I could go on and on about John and the bad decisions he has made for his family by not having the proper amounts of insurance. There are no excuses for John. He failed to take action and get his family protected, he was educated on all of the different situations that could happen to his family and decided not to take action. I just hope that John could deal with the consequences if the unexpected happened!

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Cite This Page (APA): Disabled World. (2011, June 9). Basic Insurance is Usually Not Enough. Disabled World. Retrieved September 22, 2023 from www.disabled-world.com/disability/insurance/basic-insurance.php

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