How to Insure Your Income: Determining Your Needs

Determining the relevance and affordability of the premium requires you to have a good understanding of your circumstances -- both from a financial standpoint and a personal perspective. A thorough job of fact finding can help you attain this level of understanding.

A needs analysis process will develop data and information regarding the following issues:

• Personal information, such as where you live, what you do for work, the size and shape of your family;
• Other insurance you own, such as individually owned life and health insurance, including names of insurers, amounts of coverage, beneficiary designations, etc.;
• Statutory benefits, such as eligibility for workers' compensation benefits, Social Security, state programs and similar benefits;
• Business data, such as business location, job title and duties, salary and work-related benefits, such as group life and health insurance, pension benefits, sick pay, sick days, etc.;
• Assets, which means various liquid and non-liquid assets, including cash, securities, real estate, etc.; and
• Liabilities, which means fixed monthly expenses, such as rent, food and shelter, as well as variable expenses (medical, dental, home and auto repair, etc.).

Organized differently, these issues can be thought of as two categories of concern: what you make and what you have to protect.