Planning for the Unexpected: Insurance Essentials for Farm Families

One of the most difficult situations that I have had to deal with in my banking career is financial distress that is brought on by the illness or death of a key person in a farming operation. As I have discussed in previous articles, many farmers are not adequately prepared for the succession of their operations if they are no longer able to manage the farm. The very nature of farming brings both mental and physical risks. The stress of not being able to control the market, input costs, or weather can lead to both mental and physical health issues. And of course, farming is a dangerous occupation. Injuries and death are, unfortunately, too common an occurrence when dealing with equipment and livestock.

One of the key trusted advisors that I believe is critical for all farming families is their insurance agent. Farmers, by nature, are strong-willed, independent, and believe that they are invincible. That is why, unfortunately, many farmers overlook the dreaded discussion of health care, long-term care, or life insurance with their agent. Many do not understand the actual coverage that they have or do not have.

Health insurance is a complicated and expensive issue for everyone. Many people do not understand the issues of required medical providers, deductibles, and prescription coverage. Farmers are busy people, and far too often, they do not take the time to understand the coverage until they file a claim and discover they do not have the coverage they expected. Also, the demographic trend of agriculture shows that the farm population is aging. Obviously, aging farmers are even more susceptible to increased need for health insurance. The last few years have seen many controversial developments in the health care field, including inflated premiums and government programs like the Affordable Care Act. Speaking from recent firsthand experiences, trying to wade through the deluge of information that you are bombarded with as you prepare to sign up for Medicare is a daunting task. The key is to find a trusted insurance advisor who will take the time to explain the different options to you so that you have the coverage and protection you think you have when you face filing a claim.

Long-term disability care is another often overlooked insurance product. As mentioned previously, farming is a dangerous occupation, and the farmer must understand the financial consequences of being unable to work for an extended period. Long-term disability bridges the gap between injury or illness and the farmer's return to work or eligibility for government disability coverage if they are unable to work again.

Disability coverage is complicated, so again, engage with the help of a trusted insurance advisor to guide you in the different types and levels of coverage that are available.

The final insurance product I want to discuss is life insurance. Many farmers have some level of life insurance, but many are underinsured. Determine the coverage you need by consulting a trusted insurance or financial advisor. Along with them, analyze the financial impact on your family or your business if you are no longer living. You must take into consideration not only your debt obligations but the cost of finding someone to manage the operation. Life insurance is very affordable when a person is young and in good health. Many young people do not take advantage of the opportunity to lock in lower premiums when they are young, only to find themselves with much higher premiums as they age or develop health issues. I am constantly coaching my young colleagues to buy insurance when they are young.

In summary, health, disability, and life insurance coverage can be complex and extremely expensive. They are, however, very necessary to protect your estate. Find a trusted insurance advisor who can help you make the best and most affordable decision for you.