A financial plan is only good if you don’t have to worry about risks. These are the major risk exposures and insurance types you need to manage to protect your financial plan.
Auto/Home/Umbrella
Your home and auto policies may not sound like major risks. But if you lose your house to a tornado, or get sued by a visitor, your plan will be impacted. It is a good idea to review your home and auto plans at least once a year with your agent.Â
Medical/Dental/Vision/Prescriptions
If you have medical, dental, vision, and prescriptions coverage while you’re working, you may not be thinking about this coverage. But if you retire before you qualify for Medicare at age 65, you’ll need to find a plan. Even after you qualify, healthcare can cost you up to $285,000 per couple according to a Fidelity analysis. This can certainly, derail your plan. Make sure you have a plan that considers these coverages.Â
Disability
According to the Council for Disability Awareness, twenty-year-olds have just over a 25% chance of being disabled before they retire. While most people have group disability through work, self-employed workers may not have coverage. Checking into trade associations for group plans or ask an agent about an individual plan.
Life
In it’s most pure sense, life insurance is meant to replace income or cover debt if the insured dies. Sometimes permanent policies are sold as an investment. If you’re looking to use a policy for it’s more pure sense of protecting against a financial loss, I look to term policies. Check with your agent to determine what’s right for you.
Long Term Care
Long term care policies cover nursing home costs if you go into a nursing home, or need in-home care. Over 50% of people will require some sort of are for an average period of 1.5 to 2.5 years according to a Morningstar article. A good advisor will show you how the typical long term care scenario would impact your plan, and the costs to insure against it.Â
Takeaway
A good financial plan is only as good as it is thorough. A comprehensive financial plan from a NAPFA Registered Financial Advisor will show you the risk exposures to your plan. You can consult your insurance agents afterwards to find a specific policy. Make sure your plan won’t fail because you don’t have adequate insurance.Â
For more on insurance check out:
Liability Insurance – An Integral Part of Your Retirement Plan
