insurance planning — Blog

Do you have a Gap?

My question has nothing to do with your teeth, I am not a dentist. It actually is about the coverage gaps in your insurance...which may be just about as equally exciting to you as a root canal. Like it or not insurance of all types are required for a well-balanced financial plan of protection: home, auto, life, disability, business, dental...you get the point.

Insurance can cover a wide variety of activities and professions. For example, Germany who just won the 2014 World Cup, has an insurable estimated value as a soccer team of over $1.01 Billion (Lloyds of London).

Common Gaps

Jokes aside, insurance is the foundation of your financial plan and protecting your family. It serves as protection for your income, wealth, business continuity and estate plans.

Here are some important gaps to consider closing:

No life insurance beyond your basic group coverage.

Basic life plans offered thru work are usually 1x or 2x your salary. You probably need close to 8-10x your salary in life insurance.

Not enough protection on your earnings.

If you are disabled and unable to work, your finances could suffer quickly. Group Long Term Disability offerings thru work are usually only 50-60% of your salary and that benefit is then taxed, leaving you with a large income gap.

Not updating your Homeowners regularly.

Enjoying the recent home renovation or addition? Your actual home replacement cost if damaged just increased.

No coverage on your valuables. You can easily add jewelry, collectibles, furs, artwork and others as what are called "inland marine endorsements." This will provide the right amount of coverage whether destroyed, misplaced (lost) or stolen.

No Umbrella policy.

This is personal catastrophic liability coverage that protects you above and beyond your basic home and auto policies. It is relatively cheap ($150 to $200/year) to add to your current policies.

No proper plans in place at your business.

Is there enough money for your business to cover overhead expenses if something happens to you? What if your business partner passes or becomes disabled? Drafting sensible business continuity insurance is a necessary protection for your business' value, your employees and your estate.

Addressing insurance gaps is an essential part of any good, comprehensive financial plan. They need to be identified, reviewed and updated regularly. Contact your property and casualty agent for the home and auto items (I am sure they will thank me for these thoughts...). I will be able to assist with the rest.

As always, I am here for any questions.

To Your Financial Planning,

Luke A. Fields, CFP®

About Stewardship Cents

Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources.

Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.

Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at:luke.fields@raymondjames.com.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC

Now This IS a Scary Story

By Stewardship Cents Newsletter, click here to subscribe.

First a funny story

Our family's favorite time of year is the fall, enjoying the crisp air, apple picking, kid's sporting events and the beautiful foliage. We also like Halloween. When else can you dress up completely ridiculous and not have to explain a thing? I am always amazed how many neighbors you meet on trick or treat night. I am a big kid at heart and enjoy a good scare. For several years in a row I would scare my neighbor across the street with my Sasquatch mask. One year was epic. She had decided to stay inside her house because she learned from my prior 3 years' antics. Her mistake was she decided to sit at her kitchen table with her back to their sliding glass door, unlocked. With her husband's full permission, I quietly opened their door and perched my mask just over her left shoulder, waiting for her to turn her head just enough.... The scream was heard down the street even with doors closed!

Ok here is the real story

It's the scary story of an unprepared family, with a widow facing the recent death of a spouse, leaving a mortgage, debt and dependents to care for. We are not guaranteed tomorrow. Sickness or tragedy can sadly strike in the blink of an eye. When a financial mess is left behind, the normal period of grief and stress from the passing of a loved one can be greatly compounded spanning a prolonged duration.

Life Insurance is a basic and essential principle of financial planning.

No one likes to discuss death, I get that. However, it's important to be prepared for the uncertain. Maybe you say "I'm single and don't have any children, so I don't need life insurance." Think again. Just a small relatively inexpensive policy of $25,000 is a blessing to help your family with funeral expenses. It is true that some people reach a point in their lives that insurance is too expensive given their age or a particular health related issue. Others may have done a great job accumulating assets and living debt free that they then can self-insure through their savings. Unfortunately, the truth is many people if they even have insurance, are severely underinsured. Insurance can be affordable especially when you consider the risk for your spouse and kids of not having it.

Insurance can provide an income stream for your spouse, money to pay off the mortgage/other debts, funding for your children's college education and even a financial legacy to pass on.

What to look for...

Buy Term. Typically (except for unique situations), term life insurance could be your best option. It provides the most coverage at affordable level premiums and it can be re-shopped at any time for better rates. Term also helps free up cash you could have spent elsewhere, such as investing.

Choose the proper coverage. The proper amount of coverage on you and your spouse's life should be calculated based on your needs not simply a multiple of your current salary or on an employer's group plan. It is flexible, but has to be selected appropriately.

Choose the right provider. Life Insurance is offered everywhere from automobile clubs to alumni associations. However, choose a qualified professional who will consider your unique situation and full financial goals.

Keep your coverage updated. With new babies, a new mortgage, job change or retirement insurance plans need to be revised.

For more informaton on choosing insurance click here

Any opinions are those of Luke A Fields, CFP® and not necessarily those of RJFS or Raymond James.

About Stewardship Cents

Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.

Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com.