A financial plan is an important part of ensuring financial stability for you and your family no matter what the future brings. But no financial plan is complete without considering how insurance fits into it. What forms of insurance should you incorporate into your financial planning and why? Discover a few of the most important.
1. Asset Protection Insurance
Your financial plan should protect and grow your assets, and insuring them appropriately helps with both goals. Remember that asset insurance not only protects you from replacement costs – which you may or may not be able to cover on your own – but also from the risk of financial liability and personal lawsuits.
Every homeowner should begin with sufficient homeowners insurance coverage that will pay not just their home value but the cost to replace it. You also need vehicle insurance, insurance for any off-road vehicles and boats, and sufficient coverage for high-value personal items like jewelry and artwork. Finally, flood insurance is increasingly important and is rarely in primary home insurance policies.
2. Life Insurance
Life insurance is usually thought of in the context of estate planning, which is an essential part of an overall financial plan. Life insurance could strategically provide for funeral or immediate expenses after your death, make up for a small estate, or provide equal assets for various heirs.
But some life insurance products – in particular, whole life insurance – are also an investment vehicle and an asset. Investment returns can generally grow tax-free, and your policy may allow you to borrow against its value for other asset purchases.
3. Health Insurance
Do you and your family have good health insurance coverage? While health insurance’s first goal is to provide access to medical care, it also helps your financial plan in two ways.
How? First, it helps keep you healthy – both mentally and physically – and promotes proactive medical care so you can carry on with your daily life, including earning an income and managing investments. Health insurance also limits the financial risk of unexpected medical costs or emergencies, allowing better financial planning and stability.
4. Business Insurance
Depending on your sources of income, you may need commercial or business insurance of different types. A general liability policy protects business owners, including both sole proprietors and partners or other investors, from personal liability for business debts. Business assets also need covered by property insurance, as residential property and vehicle policies rarely cover business use.
In addition, your particular business pursuits might necessitate landlord, cyber, business interruption, product liability, errors and omissions, or officers and directors insurance coverage. You have a myriad of specialty commercial insurance products to fit every business owner, landlord, or investor’s specific types of risk.
5. Disability Insurance
What would happen to your income and family if you lost the ability to earn an income? For most Americans, even a short-term interruption in their income stream could create havoc in their finances. Disability insurance provides income replacement and cash in the event of a covered injury. In a financial plan, income-replacement policies help reduce the need to keep low-earning liquid cash for emergencies.
If you have not included these forms of insurance – and possibly others – in your financial plan, you may miss out on a cost-effective way to improve your finances.
Kenneth Rhodes and Associates Inc offers a wide variety of both insurance policies and financial services to help you find the right mix. Call today to speak with one of our knowledgeable team or schedule an appointment. The time and money invested in this facet of your planning now will provide benefits for many years.