Got an Insurance Plan?
Hourly financial planning from an independent wealth management advisor can help you put together an insurance plan with the flexibility to incorporate other important aspects of your financial situation.
This is because a fee only financial planning company like BFP does not receive sales incentives or large commission checks for writing an insurance policy. This removes the incentive to over insure individuals and their families. On a side note, adding money into the market may not be the best recommendation. Clients have accessibility to the planning without transferring their assets.
Insurance coverage is an important consideration in every financial plan. As a fiduciary, insurance plans from BFP could incorporate a combination of increasing and reducing coverage. The recommendations depend on your goals (estate) and the types of coverage.
What are a few things insurance planning covers?
1) Consider the type of risk.
Here are some examples of Risk:
a- An automobile accident
b- Damage to your home
d - Injury
e - Loss of life
2) Attempt to quantify the potential loss caused by the risk.
The loss will cost money but what will be the extent of the losses.
a- The cost to replace or repair your personal property
b- Lost wages resulting from death or an injury that causes a disability
c - Health care costs associated with the injury
d - The possibility that you will lose something of personal importance such as an heirloom or gift
3) Think about the likelihood of the loss.
You won’t be able to predict with 100% accuracy that the loss will or will not happen. This is why these risks are insurable, but some things can be avoided or are overall less likely.
a - Does the area you live have a higher risk of certain losses?
Is there a risk of flood or other natural disaster?
What is the crime rate near you?
b - Is your job dangerous or have a higher risk of an accidental injury?
c- Do you drive in rush hour traffic on a regular basis? Or do you work from home?
4) Review the definitions, exclusions and state requirements for your policy.
The definitions contained in a policy can limit coverage or the scope of a commonly used word. For example, you may read something like, “Family Use” but this may not be exactly how you picture it.
The exclusions are used to further detail what specific things will not be covered. For example, some locations have too many natural disasters of a certain type which makes insurance companies exclude those risks.
States require certain limits of coverage for automobile. For example, Rhode Island residents are required to carry a minimum of $25,000 per person and $50,000 per accident of 'bodily injury liability' coverage. This coverage will pay for medical expenses, lost wages, and pain and suffering costs for damages you cause to another person.
5) Which type of policy?
Life insurance comes in a variety of options like whole life, term, universal, or variable. Policies can have attributes added like 'indexing', or loans on cash values, or offer some guarantees. Life insurance offers tax free money to the inheritors which can help against wage losses and replenishing an estate. It is possible to over insure or to not have enough coverage or the right type of policy.
Like stated above, vehicle, home, boat, motorcycle, among other types are subject to state minimum coverages. A careful review of these can create a lot of value.
Disability benefits may be offered by your employer. Other times it may be appropriate to obtain your own policy to cover against an accident.
Insurance Recommendations -
Whenever BFP recommends a policy or coverage, additional consideration is placed on the costs of working with an insurance agent as well as the potential opportunity costs, inflation risk, and your financial goals. The recommendations you receive will put you and your family first.
BFP has independent insurance agents as part of a professional network available to clients. These independent insurance agents can offer policies from a range of providers. Clients of BFP are not under an obligation to use their services or to purchase a policy to receive financial planning.