Are you financially protected if a devastating event were to occur?
Risk Management involves preparing for life’s uncertainties. While we all hope to avoid unexpected events, planning ahead and securing appropriate insurance coverage can help protect you and your family, providing peace of mind and financial security. Your advisor can help you review your risk factors and current insurance plans to identify any coverage gaps that may need addressing. For example, most companies offer life and disability insurance as part of their employee benefits, but often at levels lower than what individuals or families might require. Our team does not sell insurance nor make a commission from any insurance you purchase, but we can help you evaluate various plan options and provide recommendations.
A few of the insurance policies you may want to consider depending on your financial situation and professional and lifestyle risk factors include:
- Disability insurance
- Life insurance
- Health insurance
- Homeowner’s insurance (or rental insurance)
- Auto insurance
- Long-term care insurance
- Umbrella insurance
- Malpractice insurance
- Pet insurance
Do you have enough insurance coverage?
A financial advisor can help you determine if you have the right coverage and if you would benefit from additional coverage.
Common Questions About Risk Management:
How much life insurance do I need?
It’s common to hear recommendations based on a general rule of thumb, but this often doesn’t account for individual circumstances. To determine the right amount of coverage for you, it’s important to consider the following:
- Short-Term Needs: Immediate expenses such as funeral costs, final medical bills, and any outstanding debts
- Long-Term Needs: The amount required to maintain your family’s standard of living, including housing, food, clothing and other necessities.
- Future Obligations: Potential future expenses, such as children’s education, support for aging parents, and other anticipated costs.
Once you estimate the costs of these factors, subtract your liquid assets from the total to get a clearer picture of the coverage amount required. While considering general guidelines can be a useful starting point, a detailed analysis will provide a more accurate estimate tailored to your specific needs. Your advisor can work with you on this analysis to ensure you have the appropriate level of coverage.
Is umbrella insurance worth purchasing if I already have home and auto insurance?
Umbrella insurance provides an additional layer of liability protection that goes beyond your standard home, auto, and other insurance policies. If one of those policies were to reach its limit, your umbrella policy would kick in. When compared to other insurance policies, this type of policy is relatively inexpensive for a high amount of coverage. Most people who purchase umbrella insurance will not have a need to use it within their lifetime, but it secures your financial assets and financial future should the unexpected occur. For example, say you were found at fault in a multi-car accident with the total costs amounting to $600,000 in medical bills and $150,000 in property damage. If your auto insurance had a liability limit of $300,000 per accident and $100,000 for property damage, you would be left personally responsible for $300,000 in medical expenses and $50,000 in property damage (or $350,000 overall). As a younger professional, you may not have this amount saved yet or it could wipe out any of the savings that you have that were necessary for your retirement. With an umbrella policy, this additional $350,000 would likely be completely covered. If you can afford an umbrella policy, they can prove valuable should the need arise.
What types of disability insurance should I consider?
Disability insurance is designed to protect your income in case you are unable to work due to illness or injury. There are two main types of disability insurance to consider:
- Short-Term Disability Insurance: This provides coverage for a limited period, typically 3-6 months, and helps replace a portion of your income if you are temporarily unable to work. It is often provided as part of an employer’s benefits package, but you can also purchase it individually if you are eligible.
- Long-Term Disability Insurance: This offers coverage for a more extended period, often until retirement age, if you are unable to work due to a long-term illness or injury. It usually kicks in after short-term disability benefits are exhausted. Long-term disability insurance can be obtained through your employer or purchased independently.
When evaluating disability insurance options, consider factors such as the benefit amount, the waiting period before benefits begin, and the length of coverage. Your advisor can work with you to evaluate any current coverage and what additional coverage may be beneficial.
Do you have questions about your current coverage?
Insurance can be complicated. It is important to understand the details and loopholes of any current coverage (including coverage offered through your employer) to ensure there are no gaps and you are fully protected.
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