As a financial advisor, I was responsible for putting together financial plans for clients and recommending investments for their money. If clients had money to invest, they typically did not want to take too much risk with it. Their feeling was that they worked hard to accumulate that wealth and therefore, they did not want the markets or investments to deteriorate their wealth. The fact is that just about every investment you can think of has risk. Some of them have more than others. And risk is not necessarily a bad thing. Typically when you take on more risk, you get more “reward.” At the end of the day, I wanted to protect my client’s money as well, and I wanted them to feel “safe and sound.” The only true guarantee that I could suggest to clients to make them feel “safe and sound,” though, was insurance. In fact, I insisted on a certain level of it for most clients. Many financial advisors do not view insurance as part of an overall plan, and I think that is a mistake. For me, the insurance component might not be as “sexy” as the stock market, but it is the “safe and sound” option. Again, you have worked hard to afford your home or your car or lifestyle. You would not want a catastrophic accident to happen that would take that all away.
Not all insurance is necessary and not all insurance is “worth” it. At the very minimum, I believe people should have homeowner’s or rental insurance, car insurance, and health insurance. I don’t think that life insurance is necessary for everyone, but there are certain instances where I feel it is a must. On a basic level, where life insurance is concerned, you have whole life or permanent insurance or term life insurance. Unless it is part of a larger estate planning strategy, I don’t feel that whole life insurance is worth the cost, so that leaves term insurance. I like to see people who have a mortgage and/or children have term insurance. If something were to happen to you, your home and your children would be the biggest “financial concerns” that you would have. Term life insurance could help your surviving family members stay in their home and if you have children, it could help pay for their college or lifestyle for a period of time. Most people in their 20s, 30s, and 40s do not want to think about life insurance; however, if something were to happen to you or someone you love at this age, the financial burden could be catastrophic on those left behind. In addition, it is less expensive to get life insurance while you’re younger and if anything were to happen to you down the road, you run the risk of becoming “uninsurable,” and you would miss your opportunity to even have life insurance. In this song they say “even if we’re six feet underground I know that we’ll be safe and sound.” Yes, if you were six feet under, you would be safe and sound, but would your family?
The other insurance that I like to see anyone over 50 have is long-term care insurance. Again, people in their 50s do not want to think about when they are incapacitated, but the increasing costs of long-term care could become a major financial issue for you or possibly your children. Long-term care insurance is a way for you to preserve your assets and control the level and quality of care you would receive should something happen to you. Again, just like life insurance, long-term care is less expensive when you are younger and getting it earlier would protect you in the case of something happening down the road that would make you uninsurable.
Again, insurance is not fun and sexy and typically you are paying for something you may never use so you will feel it is a waste. However, if something were to happen to you, your family, or your assets, the only way to truly keep everyone “safe and sound” is insurance.