Tag: Insurance

Teacher Bankruptcy

Teachers: The 5 Most Common Causes of Bankruptcy and How to Protect Yourself

As educator wages struggle to keep up with rising costs of living, teacher bankruptcy unfortunately is far too common.

Teacher Bankruptcy – What are the Causes?

While in the past bankruptcy was a means of evading creditors, today the pandemic has a more sinister basis. Ranging from poor money management skills to personal calamities such as divorce and medical emergencies, financial pressures today are pushing many Americans to file for bankruptcy. Here we look at the top 5 most common causes of bankruptcy. How can you avoid a teacher  bankruptcy and becoming a part of the bankruptcy statistics?

Medical Expenses

Teacher Bankruptcy - Medical Expenses

Medical expenses are the leading cause of bankruptcies in the United States today. Rising medical costs coupled with deteriorating health due to poor lifestyle choices combine to exert extraordinary pressure on individuals and families in the US today.

To avoid going down this road, try the following. Take care of your health. Fewer visits to the doctor mean fewer expenses. Find an insurance plan with low deductibles and other extra payments that fits your needs. Are you eligible for the deductions? Finding out could save you money.

Losing a Job

Teacher Bankruptcy - Losing a Job
Whether through downsizing, retirement or resignation, losing a job always comes with a financial shock. The regular paycheck may be gone, but bills keep coming in. If you cannot find a job fast enough, this pressure can exhaust your savings and leave you with few options.

If you are still employed, avoid this bankruptcy trap by building up your emergency fund. Put aside 6 months to a year of living expenses. If you do lose your job, you will be able to survive for this period without the need to touch any of your other investments or savings.

Poor Use of Credit

Teacher Bankruptcy - Credit Card Debt
Excessive use of credit is the third trap that leads many to bankruptcy court. Splurging on expensive things bought using credit is a poor financial choice. Yet many will do this without a second thought. The trap here is the fallacy that credit cards offer free money.

To avoid this, limit your use of credit cards and other forms of credit. In fact, go as far as only having one credit card, which you can easily track. You may also consider using a debit card instead of a credit card, so you know you are only spending what you have.

Separation/Divorce

Teacher Bankruptcy - Divorce / Separation
Divorces and separations come with serious financial ramifications that leave many a divorcee bankrupt. Legal fees coupled with other costs such as child support and alimony may leave one or both partners financially strained.

Considering in some cases the court can decree back payments, this is a common reason for bankruptcies in the US. To avoid this, maintain a good handle of all your assets and obligations so that if this does happen, you are prepared.

Unforeseen Expenses

Teacher Bankruptcy - Unforeseen Circumstances
These occur through loss of property from natural disasters, theft, fraud and a host of other reasons. When this happens, the affected party is usually unable to recoup the loss. If the loss was tied to some form of lien or income, they may find themselves financially overwhelmed. To protect yourself, maintain insurance on all properties that you deem crucial to your financial wellbeing.

While some of these reasons for teacher bankruptcy are unavoidable, in most cases sound planning, judicious fiscal discipline, and adequate preparation can mitigate, if not avert, these financially-ruinous events.

Please Share!
Why Do I Need Disability Insurance?

Why Do I Need Disability Insurance?

One never knows when tragedy will strike. A herniated disc, household accident, car accident or any other misfortune can befall you anytime and render you incapable of ever working again. So, consider insuring your ability to work and earn a living. If you are asking yourself “Why do I need disability insurance?” consider that your ability to work is the single most important asset you have. That said, the potential value and importance of disability insurance cannot be overstated!

What is Disability Insurance?

If you are unable to work due to an injury or sickness, disability insurance (sometimes known as disability income insurance) usually replaces between 50% and 70% portion of your income. This is very important as you will have a sustainable income even when injured. The largest financial asset is likely your ability to earn an income. It is, therefore, really worth protecting. However, not all your income is replaced, the reason being you will have very little incentive to return to work.

Why Do I Need Disability Insurance?

So, why do I need disability insurance, you ask. A disability can occur anytime. If you are not financially prepared when you are hit with a disability, you will be hit with a great deal of hardship. If you are unable to teach or otherwise go to work, you will then lack a steady income. That means that your usual bills (from food to your mortgage payment!) could become a problem for you. The “why do I need disability insurance” question will become all too real if tragedy befalls you. Disability insurance can give you peace of mind and if the worst happens, at least you will have a bit of an umbrella to get you and your family through hard times.

When Do I Need Disability Insurance?

Well, if you wait until you are actually disabled, then you might be uninsurable. Obviously, you have to buy disability income insurance when you do not presently need it. It’s the only way it can help you in the future. Naturally, when you are young and healthy, disability insurance policies are most affordable. It might sound like a waste of money initially, but if something happens you will surely be thankful you prepared for the worst.

Pros of Disability Insurance Coverage

In the event that you get disabled, you can gladly receive a portion of your latest income. This helps you avoid the prospects of filing for bankruptcy or foreclosures. Secondly, you are able to have a more complete set of protection for your income with disability insurance. So, do I need disability insurance? Indeed. Additionally, you can equally get more money to spend on medications or therapies during your recovery with disability income insurance coverage.

Cons of Disability Insurance Coverage

Firstly, disability insurance takes time to go through. The waiting period can stretch up to three months. During this period, you will have to find other sources to provide for your needs. In addition, disability insurance is only paid for a limited period of months. Two to five years for long-term disability insurance. One to two years for short-term disability income insurance.

Recommended Disability Insurance Providers for Teachers

Here are two providers that specialize in disability insurance for U.S. educators – NTA Life and the NEA Income Protection® Plan. If you are in a different country, please leave a comment below and I will try to help you find some disability insurance options in your area!

NTA Life

 

At the most basic level, National Teachers Associates Life Insurance Company (“NTA Life”) offers supplemental insurance products that provide coverage which complements an individual’s primary major medical coverage or employer’s primary benefits package.

Benefit payments are paid directly to you (or the person you specify) in addition to any other insurance — including HMOs and PPOs. In most cases, these products are portable — you may take them with you should you change your job or retire — and guaranteed renewable for life.



NEA Disability Insurance

 

This exclusive program is available only to NEA members who are actively employed in the field of education 15 or more hours per week—and it’s easy to apply.

Choose the size of your monthly benefit in $100 increments, up to two-thirds of your regular salary, or $6,000.

Choose Short-Term Disability (STD) or Long-Term Disability (LTD) protection. STD pays benefits up to a maximum of two years (depending on your age when benefits begin). LTD pays benefits up to age 67 or longer.



Thanks for reading and hopefully this post helps to answer your “Why do I need disability insurance?” question. If you have any comments or questions, please share them in the comments section on the bottom of the page. For more insurance and recommendations on how to save money be sure to subscribe to our newsletter!

Please Share!