Insurance is crucial to your success financially.
But most people I come across make the same, huge mistakes.
I want to help you make the best decisions for you and your family.
Here are 5 common insurance mistakes I see (and how to avoid them):
For most people with wealth, the goal of insurance is to protect you against the biggest risks and the largest outlays of cash.
This means you should be protecting yourself from large liability claims.
Not $500 expenses from a fender bender.
So what does this look like in practice?
It means you should not be worried about insurances on your phone.
It means you should not be worried about low deductibles on your house & car.
But what you should be focused on:
Protect the big risks - you can make these changes for not much added dollars when you raise your deductibles.
So many people avoid certain insurances because “it won’t happen to me”.
I get it. We all think we are invincible.
But the truth is, we aren’t.
Ask anyone who is disabled and claiming disability insurance.
They never thought it would happen to them.
But it did.
No one expects it to happen until it does and at that point, it’s too late to insure.
If your children are still on your auto insurances, you are running a huge risk.
If they were to get in a car accident and injure a doctor, a lawsuit is coming.
And it’s coming at you, the one with money.
Once they are old enough, gift them the car and get them on their own insurance.
No one is saying you cannot still pay for it. But you need to protect yourself.
Many people get sold on permanent life insurance.
And I’m not saying no one should have it. It has plenty of good use cases.
But most who are young and have kids have large insurance needs.
This could be $1-$5mil+ based on income, debt, etc.
The best way to insure this is with term insurance.
The monthly cost of insuring that through permanent life insurance would be insane.
Insurance is for protection first.
We see a ton of mistakes with health insurance.
Whether this is from picking the most expensive plan “because it has to be the best”.
To picking the lowest cost plan “because nothing is going to happen to me”.
You want to evaluate all your options.
Do the math.
We analyze every option, the deductible, the premium, the benefit of an HSA/FSA, etc. to help our clients pick the best plan.
Compare the monthly cost, deductible, out of pocket max, etc. to figure out the best plan for you.
As I said, insurance is really important. As you're building wealth, the fastest way to destroy it is by large dollar amounts needing to be paid.
Most of which can be insured against!
Take some time this year and analyze all of your insurances to make sure you are utilizing the proper policies.
Financial Advisor