No one expects to be injured in a car accident and be out of work, however, the National Safety Council reports that over 4.4 million people were injured seriously enough to require medical attention in car crashes last year, and 38,800 people lost their lives.
Chances are very good every driver will be in at least one car accident in their driving career. Will your injuries be serious enough to put you out of work? Are you the family breadwinner? Do you have a plan in place to replace your income stream should you be injured in a car accident and unable to work, or if you should die?
Government benefit programs such as SSI or SSDI are usually insufficient for an individual to live on, much less a family. As morbid as it may seem, it is incumbent upon you as the primary source of income for your family to have a contingency plan. This article, from the office of a prominent life insurance beneficiary attorney, will explain your options.
Auto Insurance PIP
Personal injury protection (PIP), called no-fault insurance, can help cover expenses due to injuries from a car accident such as medical bills, lost wages, or funeral costs. If you elect to pay for PIP coverage, this means your expenses will be paid in the amount of coverage purchased without regard to who was at fault for the accident.
PIP coverage is useful in at-fault states where if you were at fault for the accident, the other driver’s insurance will not pay you, but you can still make a claim against your own insurance policy.
Individual Life Insurance
It is unlikely your auto insurance PIP coverage will pay all of your expenses if the accident was serious and your injuries were severe. For this reason, it is prudent to have term life insurance.
You will fill out an initial application and medical questionnaire, and in some cases, submit to a medical exam. The insurance underwriter will write your policy and determine what premiums you will pay according to the amount of coverage you wish to purchase and the likelihood you will die within the policy term. You pay premiums, and if you do die within the policy term, your beneficiaries receive the death benefit.
You can purchase a rider to your term life insurance policy called Accidental Death & Dismemberment coverage (AD&D). AD&D pays you if you are seriously injured in a car accident, and pays your beneficiaries if you die as a result of that accident.
Employer-Provided Group Life Insurance
Many employers offer group life insurance coverage to their employees at low- or no cost. The amount of coverage is usually a multiple of the employee’s annual salary.
If your employer offers group life insurance, enroll. You will likely have the option of purchasing AD&D coverage as a rider.
Income Replacement Insurance
Income replacement insurance is a good idea if you are a high-wage earner, and your wages cannot be replaced entirely by a combination of the government benefits you are entitled to plus insurance coverage.
To purchase income replacement insurance you will have to provide the insurer proof of income. Take note of exclusions from the policy, as they will vary among insurers.
Enjoy the peace of mind you will feel when you put your income-replacement plan in place. Hopefully, you will never need it, but when and if you do, you are prepared.