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Though most people these days spend a vast majority of their time in terms of their “financial life” figuring out their investments, the all too underserved end of the market and the part of the market that most people unfortunately don’t pay enough attention to is risk management. In other words, insurance.
Insurance by its very nature is the idea of looking at the potential things that can happen in your life, sickness, accidents, disability, or death, and quantifying the real potential financial consequences of any of these incidents and determining if you want to do nothing, in other words, take on that risk yourself, or if you want to insure that risk. Most people wouldn’t think of not having property insurance regardless if they rent or own. By the same token, none of us, thanks to most state laws, have the ability to drive around without auto insurance. Yet, it is in all the other aspects of people’s lives that they probably need and don’t have a regular insurance review.
Generally, when we look at an insurance, it is in the context of an overall financial plan. However, there are a couple of guidelines that everyone should at least make proactive decisions about.
Disability: Did you know that you are five times more likely to be disabled during the course of your working life than to pass away prematurely? Even with these odds, though, most people do not have a full understanding of what their disability plan is. Most people, to the extent that have disability insurance, probably get it through their work. But do you know how much you have? Do you know how it works? Do you know what the tax treatment is going to be? These are questions that you should have the answers for. Again, if you do not have disability insurance through your work, then you might know that disability insurance is not inexpensive. Compared to the inability to secure income through employment, however, it is something that you should probably contact an insurance professional to discuss.
Life insurance: Most people out there, when they think of financial products, are familiar with life insurance yet know very little about it. Life insurance is a very complicated product and there are all kinds of choices that one can either make deliberately, or in-deliberately, depending upon whether they are working with a professional, buying it over the web, or deciding not to buy it at all. The average single person out there with no liabilities probably doesn’t need life insurance; however, as people start to get married, take on obligations such as a mortgage, and certainly, once they have children, a full insurance review of both permanent and definitely term life insurance should be considered.
Long-term care: Most people do not want to think about what is going to happen to them when they get old and cannot take care of themselves. Most married men like to believe their wife will take care of them. Most married women are just not sure. As one approaches retirement, it is recommended to do an insurance review on a regular basis. And when in your early to mid-50’s, if not sooner, one might consider the costs and benefits of sharing the risk of an extended long-term care stay with an insurance company. Again, insurance products like these are not always cheap; however, take a look at your overall situation, the income you’re going to have in retirement, the assets you’re going to have, and make a proactive decision in terms of whether you want to carry insurance or not carry insurance.
These are the primary products other than your standard property and casualty insurance that an insurance professional would be able to help you, and again, a professional should be able to help put all of these various products in conjunction with a financial plan and help you make a decision in terms of the risks that you want to shoulder on your own and the risks that you’d like some help shouldering.
