I'M WORRIED ABOUT THE ECONOMY. WHAT CAN I DO TO PREVENT LOSS OF INCOME?

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What Steps Can I Take Now To Prevent Income Loss?

In the news every day, we find more and more companies laying off employees. The jobless rate continues to rise, and millions of Americans are faced with a severe financial situation: pay your mortgage or lose your home.

If you currently have a job and are not facing layoffs, you are one of the fortunate ones. However, even a steady job in the present can give false security. Layoffs or job loss can happen at any time without warning. Though you go to work today, you may be out of a job tomorrow, and then what would you do to replace your income?

Get Income Protection

Income replacement insurance is a popular form of insurance that replaces your income due to disability or sudden lob loss. Though disability insurance is the most popular form of income replacement, you can also find insurance companies who will sell a policy that will replace a portion of your monthly income should you find yourself out of a job. Usually income replacement insurance only covers about 1/2 to 2/3 of your regular income, but having at least a portion of your income replaced when you’re unemployed can help save your home and family from financial ruin.

Get Mortgage Protection

Mortgage protection insurance is also available that can pay all or a portion of your mortgage if you are laid off or unable to work due to disability. Usually you must pay premiums for a certain amount of time before a company will agree to pay a claim. Most mortgage protection insurance policies only pay a portion of your mortgage, or will only pay a few months, but a little help can make a big difference in preventing foreclosure.

Purchase an Annuity

If you have the cash available, you may want to purchase an annuity. Annuities are generally sold by insurance companies and are an investment vehicle that results in regular monthly income payments to you. With an annuity, the insurance company invests the money you contribute. When you agree to have them pay out the money back to you, you can determine how long you want payments for, or determine a monthly amount until the annuity is exhausted. An annuity can be better than a regular savings account because of the investment interest that is applied to the funds. If you have a good sum of money available, consider an annuity investment that can result in regular income to you in the case of a job loss.

Contribute to Your Savings

Everyone should have an emergency savings account. Since no one is completely immune to job loss or sudden loss of income, having a savings account with at least three and preferably six months of living expenses can be a saving grace. If your savings account balance is zero or is very little, start contributing more each month until you are confident that you could live off your savings for a few months while you get back on your feet.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

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