Insurance planning allows you to identify the greatest risks to your financial future and then develop a strategy to eliminate or mitigate those risks.
Before you simply decide to buy insurance to cover the risks you face, it is important to identify the most significant risks, determine what the negative impact would be, determine if the risk can be avoided, and then – if needed – purchase the right type of insurance to cover the remaining risk. This process is the heart of insurance planning.
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Insurance planning allows you to identify the greatest risks to your financial future and then develop a strategy to eliminate or mitigate those risks.
Before you simply decide to buy insurance to cover the risks you face, it is important to identify the most significant risks, determine what the negative impact would be, determine if the risk can be avoided, and then – if needed – purchase the right type of insurance to cover the remaining risk. This process is the heart of insurance planning.
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Buying Insurance Should Be The Last Step
When you finally decide to purchase insurance, it’s important to realize that not all insurance policies are created equal. The type of insurance, the coverage limits, the timeframe of coverage, and the actual insurance company used are important ingredients to successfully managing the risks you face and protecting your financial future.
Buying life insurance does not mean you’re managing your risks appropriately or even that you are appropriately protecting your financial future. Life insurance should be the last step you take after identifying your risks, evaluating those risks, and minimizing or eliminating those you can. This process is critical to effectively protecting your future.
Unfortunately, as many people can attest, life insurance salespeople reverse or eliminate the process altogether and just try to sell a product when a better option is available. Often, that is compounded by selling the wrong product when a better and lower-cost product is available.
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Our insurance planning will help you protect your financial future by eliminating, minimizing, and appropriately covering risks. The key is finding the right insurance product with the correct coverage to insure you properly.
- Identify The Risks
- Evaluate The Financial Burden
- Eliminate and Minimize Risks
- Choose The Right Policy
- Beware of Annuities
- Monitor Your Insurance Regularly
Identify The Risks You Face
Your situation is unique, and your goals are unique. Naturally, the risks you face will be unique. Some of these risks might be shared in some way with other people, but the impact those risks may have on your future is truly unique. You need to identify the risks you face specifically.
Evaluate The Financial Burden
Identifying the risks you face doesn't tell you what financial burden they might cause. Some risks aren't that bad, and at their worst, they wouldn't hurt you too much financially. Others represent substantial potential economic consequences.
You need to conduct an economic analysis to determine what impact your most critical risks could have. Without putting a value on the potential loss, you cannot possibly determine how to deal with that risk.
Eliminate and Minimize Risks
If it's possible to eliminate a risk, that's usually the best thing to do. This step is often overlooked; people assume that a risk to their financial future will always be a risk to their future. That's just not true.
In many instances, you can develop a strategy to eliminate the risk. If you can't eliminate a risk, it may be possible to reduce the potential financial impact to the point where you don't need insurance.
Choose The Right Insurance Policy
When we get to the point of buying insurance to cover risks you can't eliminate or reduce, you still need to buy the right insurance. Watch out for insurance sales pitches. You should only buy the right amount of the right type of insurance at the right cost from the right insurance company.
With all the sales pitches out there, that's not easy to do. You shouldn't pay too much or buy too much. And you certainly should not buy from a weak insurance company.
Beware of Annuities
Annuities are a unique type of insurance product, and there are a handful of situations where they are helpful. Sadly, they rarely perform well and typically offer oversized commissions for insurance agents who sell them where they're not needed.
This creates an environment that is rarely in the investor's best interest. Annuity sellers use shady and unethical sales tactics, often preying on elderly or uninformed investors. It's crucial to take every precaution to ensure an annuity is right for you before you buy one.
Monitor Your Insurance Needs Regularly
Once you've purchased insurance, you cannot just ignore it. Your risks change over time; some go away, some change in significance, and new risks can arise as your life changes. You need to review your risks and insurance policies every one to three years, depending on the type of insurance.
As you review your existing policies, exploring whether a better policy might exist at equal or lower costs is helpful. You need to properly protect yourself and your family all the time; it's not something you can set and forget.
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Why Work With Us?
One of the worst mistakes you could make is relying on an inexperienced advisor or commission-motivated salesperson. A sales pitch is not advice; it usually leads to bad advice.
You need experienced and tailored advice to protect your financial future from the significant, crippling risks you face. Too little insurance, or the wrong type, gives you a false sense of protection; too much insurance saps your resources that can be used elsewhere.
First Financial Consulting takes a consultative approach – not a sales approach – to helping our clients review their risks, assess their options to mitigate them, and decide how best to use insurance. Since we provide 100% objective advice, we are free to determine exactly what you need. We are also free to look at all the insurance companies offering coverage and recommend the right company for you.
Whether you need health insurance, disability insurance, long-term care insurance, or life insurance, there are so many options available – term, whole life, universal, and variable just to name a few. We will help you structure the right product to cover the risks jeopardizing your financial future.
Hire An Insurance Planning Expert You Can Trust
Obviously, you want an experienced advisor – a firm that has done this type of planning before. At First Financial Consulting, we have been helping clients for over 45 years. Our insurance planning services have stood the test of time, and we’ve repeatedly seen clients achieve their financial goals even in the face of tragic life events.
First Financial Consulting practices a fiduciary fee-only approach. This means all the advice we give our clients is always in their best interest – not ours. It also means we won’t try to sell any insurance products. We only provide the best possible advice.
Insurance Planning FAQs
What is Insurance Planning?
Insurance planning is the process of identifying the risks you face, evaluating the financial consequences of those risks, minimizing or eliminating those you can, and then purchasing the right insurance in the right structure and at the right cost.
This process is critical to effectively protecting your future. It is not a one-time event; it should be an ongoing part of your financial planning.
Why is Insurance Planning Important?
Insurance planning is critical because the financial consequences are usually crippling. You don't buy insurance for the small things in life. Almost by definition, insurance planning covers the risks that can devastate your financial future: significant illnesses, long periods of disability, extended care in a nursing home, and unexpected premature death all impose massively expensive consequences.
How Much Should I Pay for Insurance Planning?
The cost of insurance planning should match the complexity of your situation. It's a simple matter of how many hours are needed to properly assess the risks, manage the remaining ones, and source the right insurance product(s) for you.
A 100% objective advisor should always provide you with a quote for the cost of insurance planning before any work begins.
What Role Does Insurance Play in Financial Planning?
Insurance planning focuses on the protection side of financial planning. There are rare occasions when insurance can be used to accumulate or build wealth. Still, for most people, insurance planning is focused on assessing, managing, and protecting against the risks that would prevent you from building or maintaining wealth.
How Do You Use Life Insurance in Your Retirement Planning?
We see life insurance as a financial tool that can be very useful when used in the right circ*mstances and structured correctly. In a perfect world, nothing would get in the way of your retirement plan, and we wouldn't normally use life insurance to prepare for your retirement. But we don't live in a perfect world, and the risk of the premature death of the primary earners in the family can jeopardize the retirement plan.
That is where we use life insurance - protecting the retirement plan against these potentially catastrophic events by designing and implementing the right product at the right cost.
Who is the Best Person to Talk to About Insurance Planning?
The best person to talk to about insurance planning is an experienced insurance planner who provides 100% objective advice. Avoid those trying to sell an insurance product or who don't have experienced track records in this area. Your finances are too important to trust someone who either doesn't know what they are doing or has a conflict of interest in selling you insurance.
Make Sure You're Covered
Don’t leave your finances to chance. Ensure that you’re financially covered by finding the right insurance for your unique situation. Schedule a Complimentary Consultation with one of our Insurance Planning Experts Today.
Protect Your Future
Your legacy goes far beyond your assets. Ensure that legacy carries on through future generation. Schedule a Complimentary Consultation with one of our Estate Planning Experts Today.
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