Insurance can take many forms, and the need for insurance is a very personal one. The most common reason to have a good life insurance policy in place is to replace lost income due to the death of a spouse, and to provide survivors with the financial stability necessary to not worry about fiscal issues.
For high-net-worth individuals, life insurance can be used to defer capital for retirement, and to help protect and grow that wealth for their dependents. As for annuities, they also can be very good financial instruments—if they fit your overall financial goals.
The final personal finance exercise I want you to conduct here is to do a complete review of all of your insurance products, including any annuities you may own. Ask yourself the following questions:
1) What policies do I have, and what’s the benefit amount in each policy?
2) Where are my policies, and am I dealing with more than two companies? If so, you may want to consolidate these.
3) Do I have sufficient insurance to take care of my dependents? Many people bought policies when they first were married. Now, you may have children, you may be making a lot more money than you used to, and you may have significant assets such as a home to protect.
4) What kind of premiums are you paying for your policies, and how much are you paying in annuity fees? The latter can be substantial, so if you are paying substantial annuity fees, it’s time to see if those fees can be reduced.
Performing an insurance and annuity review will give you a good idea of what you have, where you stand. It also allows you to address any flaws in your overall financial plan.
At Fabian Wealth Strategies, my investment advisory firm, we’ve set up a webpage to help you address some of the common questions involved when assessing your life insurance picture. I invite you to pay a visit to this page before you conduct your own insurance review.
If you’d like to hear more about this, as well as other personal finance exercises, and if you’d like my take on all of the market action, then sign up here for my weekly audio podcast.