An Introduction to Insurance in Financial Planning

An Introduction to Insurance in Financial Planning

Insurance coverage can help you safeguard several different areas of your life moving forward. Find out how to assess your needs.

You never know what the future holds. But you know you need to take all the available steps to secure your investments and protect your family’s legacy against whatever comes.

When you’re creating your comprehensive financial plan, consider how insurance plays a role. Insurance, including annuities, can protect against various risks and help secure your financial well-being. 

Whether it be life, health, disability, long-term care, or property insurance, you need to carefully weigh the pros and cons and make informed decisions about the insurance you invest in. Before you sign the paperwork, assess your unique needs and gain the required knowledge about your insurance options.

Assessing personal and family insurance needs

You and your family have many different factors to consider when thinking about insurance. Let’s look at these factors and how to evaluate each:

• Life stages: The stage of life you and your children are in matter. Families should prioritize life insurance to provide for dependents and cover mortgage and education expenses. 
• Dependents: Assess the financial needs of your dependents, including children, elderly parents, or disabled family members. Adequate life insurance ensures their well-being in the event of your death.
• Lifestyle: High-income earners may need disability insurance to protect against income loss due to illness or injury. Individuals with significant assets may consider liability umbrella insurance to protect against legal claims.
• Health: Health insurance is essential for covering medical expenses. You may need to consider critical illness insurance for additional protection against specific health-related financial risks.
• Retirement planning: Evaluate the need for long-term care insurance to cover potential medical costs during retirement. Annuities can play a role in providing a guaranteed income stream.

Reflect on your circumstances. How old are your children? How close are you to retirement? Are you dealing with any costly medical conditions? What kind of lifestyle do you want to have in retirement?

Types of insurance coverage you may need

After assessing your needs, explore the various types of insurance and their benefits. Here are basic details of common options:

1. Life Insurance

Life insurance exists to protect your dependents in the event of your death. It provides a financial safety net for your beneficiaries so they are safeguarded without your income. Life insurance can cover your outstanding debts and help them pay for living expenses, and it can help them cover potential estate taxes.

2. Health insurance

Health insurance is a must so you can cover medical expenses and protect yourself against very high healthcare costs. Selecting the right health insurance plan ensures you have access to necessary medical care and prevents financial strain because of unexpected medical bills.

3. Disability insurance

Disability insurance is important so that you can still receive part of your income if you get injured or have an illness that prevents you from working. This coverage can help you maintain the same standard of living despite the disability.

4. Long-term care insurance

Someday you may need additional medical care, requiring home healthcare or a nursing home. Long-term care insurance covers the costs of these services, protecting your assets from depletion and providing more financial support for the care you need.

5. Property insurance

To protect against property damage and liability risks, consider investing in property insurance. It will help cover losses from events like fire, theft, or natural disasters and shield against legal liability for injuries or property damage.

The role of annuities in insurance planning

Annuities are another form of insurance worth exploring for your strategy. Annuities provide a stream of income during retirement, providing a source of guaranteed income over a specific period. This is a great option to supplement other retirement income sources and can protect against outliving your assets. 

There are different types of annuities, each with its own features and benefits. Here’s an overview of three main types: fixed, variable, and indexed annuities:

• Fixed annuities: These provide a guaranteed, fixed interest rate over a specified period. The insurance company assumes the investment risk, offering a stable income stream. This is a simple, straightforward option.
• Variable annuities: Variable annuities allow investors to allocate their premiums into sub-accounts, similar to mutual funds. The value of the annuity and the resulting income stream depend on the performance of the chosen investments. So, income can vary based on market fluctuations.
• Indexed annuities: Indexed annuities link returns to the performance of a specific financial index, such as the S&P 500. They offer a combination of a fixed interest rate and participation in index gains and combine elements of both fixed and variable annuities.

Consider how comfortable you are with risk with planning out your annuities. Remember to talk over your options and goals with a financial expert who understands the market.

Choosing the right insurance with Avior

You have a lot of insurance options. Factoring in the right coverages is important in safeguarding the future for you and your family. Remember that you’ll need to continue adjusting your coverages over time as your life circumstances and financial goals change.

When you’re ready to get started with effective insurance planning, the team at Avior is here to guide you through it all. We tailor our solutions and approach to your unique needs and financial objectives. 

Work with the wealth management team at Avior today.

Disclaimer: Nothing contained herein should be construed as legal or tax advice. Avior and our Advisors will work with your attorney and/or tax professional to assist with your legal and tax strategies. Please consult your attorney or tax professional with specific legal and/or tax questions. Investment Management and Financial Planner are offered through Avior Wealth Management, LLC, an SEC-registered investment advisor. Past performance is not a guarantee of future results. Investments are subject to loss, including the loss of principal.