Preparing for Worst-Case Scenarios: Choosing the Right Insurance Policy to Protect Your Income
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What is the significance of open enrollment?
Hello listeners, Sean here. Today and this month, we were prizing a special series we brought you last year on open enrollment. It was such a comprehensive look at all the decisions that people have to make at this time of year that we decided to run it again. My guest was my former and now retired co-host, Liz Weston. So she's back, sort of. Anyway, we hope you find this useful and enjoyable as we move through the holidays and open enrollment season. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Liz Weston. And today we have the second episode of our nerdy deep dive into open enrollment, that time of year we all look forward to when we get to think about health plans, life insurance, vision and dental, and oh, so much more.
Yes, and in this week's episode, we're going deep on insurance that's supposed to help you protect your income if something happens to you and you can't provide for yourself or your family. In other words, you are either disabled or you die. Liz, nobody wants to talk about this stuff. I know, I know, but everybody really, really needs to. Sean, this is so incredibly important and too many people ignore it. Insurance of all kinds is meant to protect you from costs you couldn't easily pay out of pocket. But too many people who need certain types of insurance just don't have it. And others get talked into buying policies they don't need, right? Yeah. Absolutely.
Why is insurance crucial for income protection?
There's a reason life insurance salespeople don't have, shall we say, the most positive of reputations. But that doesn't mean you should stay away from the concept altogether. Now, we're not here to tell people what to do, but I think it's worth hearing the case for having some sort of financial backstop if that thing you think will never happen to you happens to you.
Yeah. So you mentioned that the main purpose of all of this is to protect income if you're unable to work.
Yes, one place where people tend to be critically underinsured is their income. How would you get by if you could no longer do your job? How would your loved ones manage if you're no longer here? Disability and life insurance can help fill the financial gaps if something bad or something worse happens to you. So today we're going to look at all the different types of insurance that can protect your income because open enrollment is a great time to review your options.
How does life insurance work and who needs it?
All right. Well, now that I've got the dialogue from Double Indemnity running through my head, we want to hear what you think too, listeners. To share your ideas, concerns, solutions around open enrollment with us, leave us a voicemail or text the Nerd Hotline at 901-730-6373. That's 901-730-NERD or email a voice memo to podcast at nerdwallet.com. So Liz, where do we start today?
We're going to start with life insurance, and our guest is fellow nerd Ryan Brady, who covers insurance. Ryan, thanks for being here. Great to be on, Liz. Thanks for having me. All right, give us a scoop. What even is life insurance? How does it work when you're getting it through an employer plan?
Life insurance is basically a safety net for anyone who depends on you financially. So if you die unexpectedly, life insurance provides money that could replace your income, pay off a mortgage, pay for your kid's college tuition, or really any other expense you want to cover. It can also give your loved ones the funds to cover your own funeral and burial costs without them having to dip into their own savings. And that can be a chunk of change, right? Yeah, it could be a lot. I believe the current estimate for funeral and burial costs is close to $8,000. Wow. Wow. So you typically you don't buy life insurance for your own benefit. You buy it for the benefit of others. So if you think about it, you know, our ability to earn income is really our greatest asset, at least for most of us. So we insure that asset through life insurance. That way, our loved ones can maintain their standard of living with hopefully minimal disruption. Of course, there are other reasons why some people buy life insurance, like for investing or estate planning purposes.
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Chapters
6 chapters
1
What is the significance of open enrollment?
0:00–1:34
2
Why is insurance crucial for income protection?
1:34–2:25
3
How does life insurance work and who needs it?
2:25–5:27
4
What are the differences between basic and supplemental life insurance?
5:27–16:58
5
What is accidental death and dismemberment (AD&D) insurance?
16:58–23:14
6
How does disability insurance protect your income?
23:14–34:08
Speakers
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