Why Is My Financial Advisor Talking About Insurance?
Perhaps the more pertinent question should be, why is your financial planner NOT talking about insurance? Although it may not be one of the more exciting areas of planning, insurance helps protect a person's assets and loved ones from financial hardship, making it a critical part of any sensible financial plan.
It is all too common that financial advisors focus solely on investment management, leaving a number of gaps that could create financial distress in the future. In order for a financial plan to truly be comprehensive and address all of an individual's needs and goals, it must also address risk and the options available to manage those risks. Below is a list of the top five insurance policies you should know about to help bullet-proof your family's finances.
Commonly overlooked, disability insurance provides income protection in case an injury or illness prevents you from working. For every month that you qualify under the definition of total or partial disability, the insurance company pays you a monthly benefit that can be used for living expenses, retirement savings and maintaining a similar quality of life for your family. Considering that every aspect of your financial world relies on your ability to earn an income, protecting it, should be a "fairly" important category to consider.
There are many different types of life insurance policies available, each of which provides its own unique benefits. For purposes of this article however, the focus is simply on the need for financial protection against a premature death and liquidity needs for expenses at death. The unexpected death of a household's primary income earner could cause irreversible financial hardship and life insurance can be an efficient and effective solution to managing this risk.
Personal Property & Liability Insurance
Two very important types of insurance, Home and Auto insurance are more so a requirement than optional insurance coverage. Sadly however, most individuals simply look for the least expensive policy they can find. The truth is that both personal property and liability insurance could protect your family's property and finances from tremendous hardship, but only if the appropriate levels and types of coverage are used.
Long-term Care Insurance
An effective option for addressing the possible need and cost of long-term care services, long-term care insurance provides daily or monthly benefits which can be used to pay for care when an individual is unable to perform two of the six Activities of Daily Living (ADL), which include bathing, dressing, eating, transferring, toileting and continence. Long-term care insurance also provides benefits to pay for care needed due to Alzheimer's and dementia. Without properly addressing and planning for the need and cost of long-term care services, a person's savings, retirement assets and family savings could be at risk.
Without the proper insurance planning, an individual's or family's financial plan is susceptible to a number of catastrophic risks. It is critical that your financial advisor properly address these risks with you in order to implement the appropriate risk management techniques for your situation.
Michael Relvas is a Registered Representative and Financial
Advisor of Park Avenue Securities LLC (PAS), 1355 Piccard Drive, Suite
380, Rockville MD 20850. Securities products/services and advisory services
are offered through PAS, a registered broker-dealer and investment advisor,
240-683-9700. Financial Representative, The Guardian Life Insurance Company
of America (Guardian), New York, NY. PAS is an indirect, wholly owned
subsidiary of Guardian. MR Insurance Consultants is not an affiliate or
subsidiary of PAS or Guardian.
PAS is a member FINRA, SIPC.