By the time we reach adulthood, most Americans are already familiar with the concept of life insurance, due in part to its ubiquitous nature. While it is true that life insurance can be a vital component of a financial plan, particularly through the “building years” of family and career, many SYM clients will eventually reach a point where they can feel comfortably self-insured.
Sorting through the options
In the meantime, the myriad of insurance options are challenging to navigate. For example, certain products come with expense structures that may not be clearly visible to the policyholder, and may incent an agent to promote one particular solution over other. Sometimes, providers play to our fears with questions and comments like: “How will your family provide for themselves if you do not purchase (this) policy at (this) factor of income?” or “Term insurance only covers you for (this number of) years; you should really have some permanent coverage.
End of life conversations are inherently sensitive. SYM strives to frame life insurance options with a cash-flow based approach, sidestepping the emotional factors that may lead to uninformed decision making. One reliable method your SYM advisor will use to determine your life insurance needs is comparing your income sources and investable assets against the anticipated cash flow needs of your family if they should lose you and your income.
We also know when an adult passes and no longer resides in a household, certain expenses are likely to decrease. As part of your life insurance risk review, we will incorporate these reductions (which may include items such as travel, auto expenses, clothing, food and housing) and add other potentially new expenses (which may include child care, household maintenance and repair, or travel). Other planning considerations may include adjustments for inflation, reasonable growth on assets, college funding needs, debt retirement, or gifts to family and charity. A careful understanding of your vision for the future, under several alternate scenarios, allows SYM to make appropriate and data-centered recommendations on your behalf.
Post-review, SYM clients often will realize a need for relatively inexpensive term insurance early in their careers, then gain the ability to generally self-insure later in life after children have been educated, the mortgage paid off, and a nest egg accumulated. That said, we also realize that permanent insurance may have a place in your financial plan as it relates to pension maximization and various estate planning strategies.
In the event that a life insurance strategy is recommended, your SYM advisor can assist in identifying the source and type of coverage. When warranted, we are also pleased to make introductions to trusted insurance professionals.