A financial review must cover more than assets and cash flow. Protection against unexpected events is also part of stability. Two major risks can interrupt income: death and disability. Without preparation, either can undo the progress shown on a balance sheet or a cash flow summary.
Insurance provides that preparation. Disability insurance replaces a portion of wages if you cannot work for a time due to illness or injury. Typical coverage pays between 60 and 80 percent of income. This protection may be purchased individually or through an employer. Including this form of coverage in your financial review ensures that your household could continue functioning even if work were interrupted.
Disability Insurance as Income Protection
Disability insurance is designed to protect income. If illness or injury prevents you from working, this type of policy provides a portion of your wages, usually between 60 and 80 percent. The purpose is to maintain basic stability when your ability to earn is interrupted.
Coverage can be purchased individually or obtained through an employer plan. Employer plans often provide group coverage, while individual policies allow you to tailor terms to your situation. Regardless of the source, including disability insurance in your financial review helps you see how well your income is protected against events that could last months or even years.
Life Insurance as a Measure of Protection
Life insurance is another safeguard to include in a financial review. The purpose is not to grow wealth but to ensure that dependents and obligations are provided for if income ends unexpectedly. At this stage the focus is not on deciding how much coverage is required or which policy to choose. The immediate task is to record the protection you already have.
Listing existing life insurance policies shows how prepared you are to cover expenses and commitments in the event of death. This record clarifies whether your family would be supported or left vulnerable. Including life insurance in the review makes protection a visible part of your financial picture.
Sources and Types of Life Insurance
Life insurance policies can be held through several sources. Some coverage is purchased directly and owned personally. Other policies are included within retirement plans. Many employers provide group coverage, while some loans, such as mortgages, may carry their own insurance provisions.
Policies also differ by type. Term insurance provides coverage for a set period. Group term is often offered through employers. Whole life combines coverage with a savings element. Universal life provides flexibility in premiums and benefits. Endowment policies are designed to pay out after a fixed period. Each type has distinct features, but for review purposes the main goal is to record all current coverage.
By noting both the source and type of each policy, you create a complete picture of your protection. This ensures you know exactly how much coverage exists, where it comes from, and whether it aligns with the needs of your household.
A financial review is not complete without insurance. Net worth shows the assets you have accumulated. Cash flow shows how money moves in and out of your household. Insurance shows whether those gains would continue to support your family if income were interrupted.
By reviewing disability and life insurance, you confirm whether the protection in place matches your responsibilities. This step ensures that progress is not undone by unexpected events. A clear record of coverage turns insurance from an afterthought into a defined part of financial stability.
Finance Health
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