Sunday, May 16, 2021

Risky Business


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“Take calculated risks. That is quite different from being rash.”

~ George S. Patton (1885-1945)

Question: How much and what kind of insurances do I need?

Answer: Following Hurricane Irma, this is a relevant and vital question. The answer of course depends on a number of personalized variables. Managing potential risks that could ultimately destroy an otherwise rocksolid financial plan is a key component in the financial planning process. Finding the right mix of insurance coverage may help you enjoy life with greater confidence. If you’re like our family, it was comforting to know we had coverage in place as we tightened the screws on the last hurricane shutter. Here are several types of coverage that allow you to plan for the worst and hope for the best. Umbrella Insurance



Myth: Only very wealthy people need this type of coverage.

Fact: Most of us have homeowner’s coverage including wind, fire and perhaps flood insurance. Understanding policy endorsements and risk exposure may help you appreciate circumstances where you may be vulnerable, whether you’re ultra-wealthy or not. If you entertain at your home, own a dog, have a teenage driver in your household or ride jet skis in your spare time, you might want to prepare for a potential loss.

Umbrella coverage is basically an extra layer of liability coverage above the limits on your home, auto and other policies – protection just in case you or a family member cause harm to someone else. For example, if your dog attacks a visitor and your home insurance covers up to $300,000 of liability, then you’re on the hook for anything above that amount if the injured party sues. If you don’t have the money, your wages could be garnished or other assets attached. Life Insurance

Myth: It’s just for people with dependents.

Fact: Life insurance can be used as a flexible planning tool that provides liquidity, and the survivor benefit amount generally isn’t considered taxable income. Though term life insurance is designed to replace the income of a breadwinner if the unthinkable happens, what’s called a “permanent” policy has an investment component that can be helpful for things such as keeping the family business functioning or paying estate taxes after death. Disability Insurance

Myth: The risk of long-term disability is too minimal to worry about.

Truth: According to the Social Security Administration, twenty year olds have a 30% chance of becoming disabled for at least six months before age 67. If you’re out of work for an extended period, the lost income can easily reach six figures or more. Even if your profession isn’t strenuous, you may not be in the clear – cancer is the second-leading cause of claims, according to insurer Sun Life Financial. Social Security disability insurance (SSDI) is a government safety net, yet the average benefit for workers in 2016 was only $1,167 a month. Considering all of this, it’s best to get a professional opinion about whether you can afford the consequences of going without income replacement coverage.

The odds are that 70 percent of us won’t have to face the possibility of long-term disability, but just like we properly diversify an investment portfolio to diminish risk, it may be wise to consider disability insurance to lessen catastrophic risk. Life is a risky business. When it comes to your family, health, property and income, insurance is a way to protect against the unexpected. Long-term Care Insurance

Myth: I don’t need coverage, Medicare pays for that.

Truth: Help with the tasks of daily living, similar to care provided in a nursing home, isn’t covered by Medicare. Such aid is a common necessity. Seven out of ten people turning 65 can expect to use some form of long-term care, according to the U.S. Department of Health and Human Services, though only one out of ten has planned ahead to pay for it. Having this type of policy increases your control over the situation, making sure your future needs will be met without creating an undue burden for your loved ones. Though coverage can be expensive, there are federal and state tax breaks available for qualified plans. Time for a Fresh Perspective

Facing risk isn’t easy, but the protection and peace of mind you may gain for yourself and your loved ones makes it worthwhile. Review your insurance needs once a year and after each big milestone in life. You can always coordinate these discussions with your trusted financial advisor and other professionals to determine the proper policies and coverage for you. Stay focused and plan accordingly.

Asset allocation and diversification do not guarantee a profit nor protect against a loss. Past performance does not guarantee future results. All investments are subject to risk. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. This information should not be construed as a recommendation of any investment strategy or product. Views expressed are the current opinion of the author and are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. There is no assurance these trends will continue or that forecasts mentioned will occur.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER ™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC, 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email darcie. Website:

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