Insurance sometimes gets a bad name. How much insurance is too much? Some say there’s no such thing, others question its importance at all. In short, everyone needs insurance. The key is having the right amount of insurance to fulfill your wishes.
We find that most of the people we meet do not consider many of the right issues that impact their wishes, both in a positive and a negative manner. This leads to them being over or underinsured. Our straightforward, approachable team can help you get all the protection you need – and none that you don’t.
Insurance is a funny thing. We religiously insure our homes, our health, and our vehicles. Yet statistics tell us that the only 5.3% of insured homes had a total loss claim in 2014 (1). And 14.24% of insured car owners had a total loss claim (2).
Yet for the same costs of auto and homeowner/rental insurance, you can typically insure your income (your largest asset) even though the probability of a person suffering a long term disability claim is approximately 25%! Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. (3)
Today, the insurance companies have offered Long Term Care “riders” with their life insurance coverage. This allows a policyholder to pay almost one-tenth of what Long Term Care insurance has cost historically. Most importantly, if the policyholder does not suffer a long term care event, the bulk of their premium goes to their death benefit, whereas long term care insurance used to be use it or lose it.
We look at insurance and protection as a critical second step on the ROI Group Financial Pyramid, just above securing an Emergency Fund. Once you have some savings, it’s critical that you protect those and other assets with some forms of insurance.
Also, we agree that in some cases you could have too much insurance – that is to say, you are paying for coverage you don’t need. Nobody wants that. Working with our insurance experts, you will learn first about what types of coverages are available. Then, you can make your decision based on your financial goals, assets, and individual situation.
Below we’ve outlined the common types of insurance and protection options that are part of a sound financial plan.
Important: Please contact us to see if we can find better rates for your current insurance policies. Or, you can schedule a free, no obligation meeting with one of our Insurance experts to get your questions answered.
Comfortable with your insurance policies? See how The ROI Group might be able to help you with other financial situations, including Savings and Wealth Building, Brokerage Accounts, College Planning, Retirement Planning, and Older Adult services, including Medicare planning.
Life Insurance
There are five primary types of insurance policies. Hundreds of different options are available amongst like insurances.
Most common is term life insurance. Typically offered in five or ten-year increments from 5-30 years, a benefit is paid out in the event of the death of the insured person. This type of insurance is critical to anyone’s financial plan, but understanding that roughly 98% of term policies never issue a death benefit is most important. Please contact us and we can explain why.
The remaining 4 types of life insurance are permanent insurance plans. This means they are non-cancelable (unless payments lapse) should the insured suffer any illness or injury. These insurance types typically have a cash-building benefit which in most cases grows tax-deferred and can be withdrawn tax-free.
Just a head’s up: Discussion of what life insurance policy to purchase unfortunately brings with it some uncomfortable strings. It inherently forces you to think about and discuss death, which nobody likes to do. The ROI Group’s insurance and risk management professionals understand this fact, are sensitive to these types of discussions, and can help you think clearly when making your decision.
Income Insurance
Otherwise known as “Disability Insurance”, this type of insurance provides benefit payments to the insured person if they cannot work or can only partially work. If you become ill or hurt and cannot work for an extended period of time, income insurance payments will provide you with income to pay your bills. Payments typically range from 60-70% of your gross income, and and can be tax-free.
Especially if you have a family that you provide for, income insurance is highly recommended by our team. There is an old saying that the difference between NOT having life insurance and not having disability insurance is: Should you die without life insurance, your family could struggle to pay their bills and even lose their house. If you have a disability event, your family could suffer the same consequences – only you would be there to watch it happen.
Long Term Care Insurance (LTCI) & Planning
LTCI is offered to help individuals pay for the cost of long-term care at home, in nursing homes, and in other facilities such as Assisted Living. This type of insurance is meant to cover extended stay or care needs that regular health insurance does not cover.
While LTCI can be expensive, there are very cost effective ways to receive LTCI w/o paying the large premiums and the cost of long-term care in general continues to grow rapidly. Everyone should have LTCI to assure you are not a burden on your family and that you can decide in your time in need where you would like to be, at home or in a facility of your choosing.
Estate Planning
Unfortunately, estate planning, like life insurance, requires some uncomfortable conversations that pertain to death and what happens afterwards.
Estate plans typically include instructions for what should happen to your estate (cars, homes, possessions, etc.) after you die, including who receives what items. However, solid estate plans may also include additional instructions, such as naming a guardian for minor children, assigning powers of attorney, dictating what should be done in the case of your disablement before death, and much more.
Our recommendation at The ROI Group is that a well-thought out and executed financial plan should have alongside it a sound estate plan. After all, the more you have, the more you will want to think about where it should go after you pass on. Our team works with various estate attorneys as well to offer clients peace of mind when considering their planning needs.
Special Needs Planning
This type of planning falls into the “protection” category. Parents and family members of people with special needs understand how important it is to have all the information available when caring for their loved one.
Special needs planning involves understanding what third-party and government benefits are available, insight into and strategy for the legal issues involved in planning for someone with special needs, and developing your overall financial plan with the needs of your loved one in mind when you are not available.
Our professionals have extensive experience working with families in this capacity, and can provide you with guidance and education where needed.
More Information
You can also learn more about insurance needs by downloading some of our free resources for individuals and families. Please contact us to speak with an insurance expert about your individual needs.