If you stop and think about it insurance is really very similar to an investment. Although it is not necessarily designed to earn money over time, it does provide protection from financial hardship in the event of a medical emergency or the loss of the ability to work due to disability.
Some, but not all, financial advisers may also act as insurance agents and provide you with insurance coverage that will help protect your finances. On the other hand, an insurance agent is only there to sell you insurance and you are not likely to share anything but the basics of your insurance budget with that professional.
In the case where your financial adviser is also providing you with information about insurance you will find that policies and types of insurance recommended are going to have the same goals as your overall financial plan. This will vary from client to client but will usually include:
- Term life insurance – this offers the lowest price policies and provides coverage up to the amount required by the client. Although it has no cash surrender value, which is found with while life insurance, you also pay a lower premium rate and can use the money you save to invest in higher interest investments.
- Disability insurance – this type of insurance is designed to provide you with income should you become disabled and not have the ability to work. Different policies will include coverage for partial disability, temporary disability or for long term disability or total disability. The length of time the policy covers and the more inclusive it is for coverage the higher the premiums will be.
- Homeowners insurance – many people are underinsured or incorrectly insured when it comes to their homeowner’s insurance policy. By working with a financial adviser that knows you equity, your investment and your goals you can choose a policy that will provide the right level of coverage to protect your most valuable asset.
Health insurance is also an insurance that your financial adviser can help you to select. Issues to consider include your age, current health, known risks and even your family health history.