insurance needs

What are the key items to consider when reviewing your insurance needs?

Excerpts from the Book – Preserving Wealth – written by Jack Lumsden, MBA, CFP®

As we clattered around in the kitchen, we sum­marized the major points from our discussion about insurance:

1. Many people underestimate the amount of insurance they need and/or buy the wrong kind.

  •  For short-term needs (less than twenty years), buy term insurance.
  •  For needs that last a lifetime, consider permanent life insurance.

2.   Families with young children should insure both spouses.

3. You are not really insuring a life but rather the income that the life could produce. In the case of spouses who stay at home to care for children, you are insuring the cost of replacing that care.

4. The insurance policy should provide enough money to:

  •  pay all debts;
  • cover the cost of university for the children;
  •  pay final taxes, including those on capital gains;
  •  replace a person’s income and/or provide for daycare or a nanny in the case of spouses who provide childcare in the home; and
  • provide for a legacy if desired.

5. Everyone needs disability insurance, which will replace your income if you can’t perform your job.

6. The only circumstance under which you wouldn’t need disability insurance is if the investment income from your financial assets equals the income you’re able to earn.

7. Verify that your disability coverage at work provides about 65% of your earned income. If it doesn’t, consider topping up your coverage with an individual plan.

8. Be sure to review critical illness insurance and long term care insurance to see if they are required in your financial plan.

9.  Be aware that Assuris will transfer a policy to another life insurance company if a life insurance company fails, but only within certain limits. Protect your family by using a financially strong life insurance company.

10. Even with an inheritance, the ability to earn an income over the span of an average working life is most people’s largest asset.

11.  A permanent life insurance policy can be a good financial tool to tax shelter income today and to potentially generate income in retirement.

12. A permanent life insurance policy is also a great tool for business owners to pay for capital gains exposure for their estate and/or family.

13.  An insurance expert can help you tailor your plan to your specific needs and make sure it’s aligned with your financial and estate plan.

For more information, you can refer to Chapter 5, Protecting your family from the book, Preserving Wealth: The Next Generation – The definitive guide to protecting, investing, and transferring wealth by Jack Lumsden, MBA, CFP®


This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.

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