Beyond taxes, insurance is another tool to manage risks that threaten your financial well-being. I’ll touch on a few insurable risks and some items for you to consider.

Umbrella and liability insurance are key to consider but are often overlooked. Property and casualty insurance is usually composed of your homeowners or renters insurance, auto insurance, and insurance for other property that you own. Most people have this type of insurance in place, but it’s focused on covering potential damage to your property.

An equally important feature is the liability insurance that these types of insurances provide if you’re found responsible for causing injury or damage to others. On most standard auto and homeowners insurance policies, the maximum amount of liability insurance provided by the coverage is no more than $500,000, and may be less. While the likelihood of being held responsible for a settlement of more than that amount is low for most people, it’s possible, especially for high-earning medical professionals. If that occurs, that could be financially devastating and a settlement in a very bad scenario could far exceed $500,000. For that reason, for individuals with significant savings, we recommend adding additional liability insurance, often referred to as umbrella insurance, that provides more liability protection and supplements your homeowners or auto policy liability coverages.

We generally recommend that individuals consider coverage equal to their net worth or perhaps even more in certain circumstances. This type of insurance is usually sold in increments of $1 million, and the cost of that coverage is usually relatively inexpensive.

In addition to umbrella insurance, life insurance can be another important area to consider. During your working career, life insurance can be critical as an income replacement to assist a surviving spouse or a child in the event of a premature passing. For those approaching the end of their working careers, the need for life insurance in that way generally declines. However, certain types of life insurance can remain important to consider as part of an estate plan. We work with our clients to evaluate the benefits that insurance can provide relative to the cost to maintain it, so that they have the data points they need to make an informed decision.

One more type of insurance important for risk management is long-term care insurance. Long-term care is another expense, like that potential lawsuit expense just discussed, that can potentially occur any time in life. But it usually is needed toward the end of life and the cost can be financially devastating at times. Long-term care insurance can help pay for services and support that typically are not covered by health insurance, Medicare or Medicaid like assistance with daily activities like bathing, dressing and eating, and they can be provided in a variety of different places, such as your residence or a nursing home, if required.

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At Altfest, we strive to understand who you are and what matters to you from the first consultation. We want to learn about your concerns and gather information that allows us to identify ways to reduce risk across your financial life. Then we’ll put together a road map to help you get to where you want to go.

If you’re not yet an Altfest client, please book some time for a complimentary consultation.

Investment advisory services provided by Altfest Personal Wealth Management (“APWM”). All written content on this site is for information purposes only. Opinions expressed herein are solely those of APWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.