What Insurance Coverage Do Police Officers, Firefighters, and Paramedics Need?

While we all like to complain about paying for insurance, the truth is most of us do not have the proper coverage. In my experience with helping Police Officers, Firefighters and Paramedics they often do not have the coverage they need.

Every First Responder knows when they clock out for the day that is only figuratively. It is the only job in the world that requires you to be “on” 24/7 without the paycheck to match.

I’m going to be blunt, and my police officers, firefighters, and paramedics already know this.  You have the most dangerous job in the world which is why the complainers in this country need to shut up and start respecting all your hard work. It’s also why police officers, firefighters, and paramedics need to protect themselves and their families 24/7.

 Too many First Responders take insurance advice from a well-meaning co-worker or family member thinking what they have should work for them too.

WRONG.

Or they listen to the first sales pitch from an insurance agent without fully understanding the long-term consequences. Quite often the insurance agent doesn’t understand your entire financial picture or long-term goals which is paramount.

The unique job risks, your financial situation, and your goals require deep analysis. These decisions factor heavily into your long-term financial plan and your family’s livelihood so you should take them seriously.

 Furthermore, as your life changes so do your protection needs. What worked for you as a young fresh-faced 25-year-old cadet right out of the academy may not fit your needs as a 40-year-old leader of the family with kids and a mortgage.

I know every single one of my police officers, firefighters, and paramedics is tough as nails. But some things are outside of our control. While conversations about protecting yourself and your family may be unpleasant, they are absolutely necessary.

Your insurance needs are an integral component of a successful financial plan. I follow a mathematically based process to ensure the best outcome. Plus, I always have conversations about long-term plans, budgets, and more.

Here are some of the factors that need to be considered:

• How old are the kids?
• Do you want college paid for?
• Is there a mortgage?
• How many more years on the job?
• How much money is saved up now?
• What is the expected return on your investment accounts? 
• Is the spouse working?
• What are the most critical years to protect?
• And more…

There are so many areas and types of insurance to consider that it really needs to be broken down into multiple conversations over time. Here are four insurance types along with key considerations when reviewing your options, and why it’s important.

Life Insurance – You need to ensure the income you would provide is fully replaced, account for medical and legal bills, and living expenses are taken care of. When reviewing your choices you need to consider the pros and cons of Permanent (Whole or Universal) versus Term solutions. Each type has very unique advantages and cost is always a factor.

Whole Life – is permanent and lasts until the day you pass. It also includes a cash value component that builds over time. How that works is every time you pay the premium a small portion is set aside. After a few years if the value is high enough you can borrow that money. This can become a very useful piece in your financial plan. Plus, it gives you liquidity options. One drawback with this coverage is it’s generally very expensive.

Universal Life – This is a permanent policy that also includes a cash value component. However, the cash value component is not as generous as whole life. There are many different flavors such as Indexed or Guaranteed Universal Life. They each work a bit differently. This type of coverage is generally more affordable than whole life which is why people will go this route.

Term Life Insurance – This is a temporary coverage that usually covers 10, 20, or 30-year time periods. This coverage is best when there is a specific time component to your needs like when you have a family. This coverage is very affordable and can be customized in many different ways.

Some people simply don’t like the idea of Term coverage that lasts 20 or 30 years and would prefer a permanent Whole Life policy that builds cash value. That’s a personal choice which is understandable. But I’ll tell you right now that the $100k whole-life policy you took out at age 25 is not going to feed your family of 4 very long, especially with today’s inflation.

For young First Responder families, the coverage needed can quickly add up to millions of dollars. For those near the end of their careers, it might look entirely different and depends on your specific financial situation. I have seen First Responders nearing retirement needing no coverage along with unique cases where they need multiple millions of dollars.

Life insurance decisions do have a big financial impact on your family. It’s necessary to project out into the future what your family’s expenses will be while balancing the costs to protect their well-being.

I take a multi-step approach to analyze various pieces of your financial situation. This will give you the information necessary to make the best decision.

Disability Income Protection –  YOUR INCOME IS THE MOST IMPORTANT THING TO PROTECT. Without income, you will fall into foreclosure, be unable to put food on the table, and more. While on-the-job disabilities are very common, a huge amount of disabilities are caused by off-the-job sickness like cancers, heart attacks,, and more. Off-the-job incidents are generally not covered. You need to look at Short-Term and Long Term options.

Short-Term: This protection is usually good for up to 365 days. The most common type is 90 days. The income protection is only in effect for the time period chosen.  The amount you need depends on your level of cash savings, if your spouse works, and department benefits.

Long-Term: This protection will kick in as early as 90 days and will last until you reach age 65 or take social security. You might be able to customize the start time depending on what your department offers. The amount you need depends on your average monthly expenses, and accounting for inflation.  Getting $3k/month might sound like enough.  However, when inflation is running at nearly 10% you’ll barely be able to survive on it within a decade.  So be sure to check if there is a built-in inflation adjustment.

I usually recommend sticking with replacing a percentage of your income. Generally, most disability plans, whether long-term or short-term, allow you to replace up to 60% of your income. In some instances, you may be able to protect 72% of your total income.

You might be protected by other department benefits here so be sure to know what they are as that impacts this decision.

Accident – This type of coverage kicks in when you experience bodily injury. Pure Accident coverage pays out based on the medical treatment received at hospitals and doctor’s offices to help repair your body. Payouts are pre-determined according to injury severity, days in the hospital, therapy sessions, and more.  You want this coverage on and off the job.

Its cousin, Accidental Death and Dismemberment (AD&D) pays a lump only if you die as a result of an accident, or lose a piece of your body. I find this coverage less desirable than pure accident coverage. Many First Responders have too much AD&D coverage because it’s very affordable so they end up overinsured.

Most pure accident coverage that pays for medical services will include an AD&D component.

Find me a First Responder that hasn’t been hurt once in their life and then I’ll say you don’t need this. Did you know police officers and firefighters both rank in the top 5 as the most dangerous and most injured professions in the USA?

You might lull yourself into thinking Accident coverage is not necessary because your major medical deductible is $2k. Well, that’s fine and dandy but for many First Responders by the time they get done with the mortgage, property taxes, car payments, putting food on the table, the kids, and everything else there quite often isn’t even $2k left in the bank for the deductible. If your children are active and get hurt all the time you’ll be in and out of the doctor’s office more than your trips to the refrigerator. Pure accident coverage often pays for itself and then some.

Long-Term Care – Long Term Care provides cash to pay for nursing homes, hospice, home health, and more. You will need to determine the appropriate daily payout rate, how many years the daily payouts will continue, benefit waiting periods, and your budget.

If you’re 40+ you definitely need to start reviewing your options.  Don’t count on your kids to take care of you. They may move out of state, or have their own family to attend to. Lastly, Medicare will not cover everything. Ask anyone that recently lost a loved elder what it’s like and I bet they’ll quickly share details on how they did not expect care costs to be so high.

 You can often pair Whole or Universal life insurance solutions with Long Term Care riders in one single package. That can be a good idea but you need to crunch the numbers. Generally, it’s best to get them separately so you can fully customize the solutions to your needs and budget.

I implore every First Responder to take a comprehensive look at their current insurance coverage.  Especially since each type kicks in under specific circumstances. I recommend comprehensive reviews at minimum when you hit these key milestones:

• When you first get on the job
• Get married
• Buy a home
• Have kids
• Nearing retirement
• Or every 5 years if none of the above apply. 

If you’d like an insurance analysis to help you procure the best solutions possible simply reach out on the Contact Page