Turn on the news, and you might hear that the U.S. economy has nearly recovered from the 2008 recession. Unemployment is back down to 5%, homes have recovered a lot of their value and the stock market has surpassed its pre-crash levels, according to a 2015 Pew Research Center “Fact Tank” article.
But you — and your savings account — might not be feeling quite so recovered.
If so, you’re not alone.
A recent survey by NPR’s Marketplace found that 58% of people would find it at least somewhat difficult to pay an unexpected expense of $1,000.
The Pew Charitable Trusts reports similar findings in a March 2015 brief. According to them, 57% of Americans say they are unprepared for a financial emergency. About 55% say they spend more than they make each month, or just break even.
Clearly, saving money is hard, especially as things like health insurance, groceries, and college get more expensive. But without some kind of backup plan, over half of American households risk going into serious debt if they ever have a medical emergency.
Here’s an easy backup plan: get some supplemental insurance (sometimes called employee-paid or voluntary insurance). Typically offered through your employer at work, it’s a relatively inexpensive way to protect yourself when your nest egg is small (or imaginary).
Here are four types of insurance to consider:
- Disability. If you’re seriously ill or badly injured, chances are you’ll have to miss work. Disability insurance helps replace part of your paycheck until you get back on your feet.
- Accident. This coverage pays you (not your doctor or hospital) if you suffer certain injuries. You can use it to help pay your deductible, co-pay, or costs your medical insurance doesn’t cover — however you want.
- Hospitalization (sometimes called Hospital Indemnity). This coverage pays you money if you are admitted to the hospital for certain reasons.
- Critical illness. Like accident, this type of insurance pays you if you experience certain serious illnesses, like a heart attack or stroke. It can help close the gap between what you have in the bank and what you might have to pay if you get seriously ill. Some policies even cover cancer.
Your employer may offer some or all of these types of insurance. Check them out during your next benefits enrollment.
For a small amount per paycheck, you could protect yourself from big bills later on – and keep whatever nest egg you do have safely in its nest.