Each day, you face a variety of risks-risks to your life, your health, and your property. Although you can’t eliminate many of these risks, you can take steps to guard against resulting financial losses. That’s where insurance comes in. If your coverage is sufficient, insurance can provide both peace of mind and financial security to you and your loved ones. Many types of insurance cover­age are available-here’s a brief overview of what’s out there.

Life insurance

Life insurance can provide funds for your surviving loved ones. The funds can be used to replace income lost as a result of your death, to meet periodic expenses, to pay debts you’ve left behind, to help with college tuition and retirement, and to pay for your final expenses. As dealing with estate taxes is still an onerous process, funds from a life insurance policy may be used to settle your estate after your death. They may also be used to fund a buy-sell agreement with a busi­ness partner. Of course you may also direct the use of funds as charitable contributions to causes you are passionate about.

While there are many re­sources to obtain life insurance, it’s imperative that you review your insurance needs with your financial planner, as how the policies are paid for and writ­ten can have a major impact on your financial plan. The two basic types of life insurance are term life and permanent (cash value) life. Term life provides life insurance coverage for a specified period of time, while permanent insurance provides protection for your entire life. Permanent life insurance can be further broken down into several types, includ­ing whole life, variable life, and variable universal life. Each type has its own benefits and can be used to address various goals and objectives.

Disability insurance

The threat of a major disability poses one of the greatest risks to your income. A serious illness or injury can put you out of work for a prolonged period or even permanently. If you had to stop working, how would you meet your expenses? Disability insur­ance policies pay you a benefit that replaces part of your earned income (usually 50 to 70 percent) when you can’t work. You may be able to obtain short-term or long-term disability coverage, or both. In general, disability insur­ance can be split into three types: private insurance (individual policies bought from an insur­ance company), group policies typically provided through your employer, and government insur­ance (social insurance provided through state or local govern­ments). There are benefits to each of these three types of disability insurance, so be sure to speak to a planner about what will work best for you.

Long-term care insurance

Your chances of requiring some sort of long-term care in­crease as you get older. In fact, one in four persons over the age of 65 will file a claim for long term care (Americans for Long-Term

Care Security, www.ltcweb.org, August 2000). Will you have the financial resources to fund a pro­longed nursing home stay or in home care for yourself or a loved one? Long-term care insurance pays a selected dollar amount per day (for a set period) for the type of long-term care outlined in your policy. Depending on your policy, care can be provided in a variety of settings, including private homes, assisted-living facilities, adult day-care centers, hospices, and nursing homes. Most policies provide that certain physical and/or mental impairments trigger benefits. The cost of a policy depends on many factors, including the types of benefits, your health, and your age when you purchase the policy.

Business insurance

No matter how careful you are in running your business, accidents happen. If you’re a busi­ness owner, you’ll need to plan for these and other risks. You may be interested in several different types of insurance coverage-property and casualty insurance, liability insurance, and group health, life, and disability insur­ance coverage for your employees. You can buy various types of insurance protection separately, or you can purchase one package that covers many potential haz­ards. You can also use insurance to protect your business against the loss of a key employee or to transfer a business interest at your death or disability.

There are many other types of insurance, including health, home, auto, flood insurance, travel and accident insurance, insurance for your boat or other watercraft, umbrella liability insurance, and even pet insur­ance. How each policy is funded and owned can have a major impact on your financial plan, so it’s impor­tant to factor insurance into your financial plan. Speak with your financial planner to learn more about the potential benefits and risks of the products available to you, and how they may be able to help you protect your assets.