Does Your Coverage Align with Your Financial Goals?

By Carly Santik, FPQP? , Financial Planning Analyst Fragasso Financial Advisors

Tips to Evaluate Insurance Suitability

Suitability refers to whether an insurance product is suitable for your objectives, budget, and timeline. For example, if you have an insurance need of $1 million, you should not be paying for a $5 million insurance policy. Testing your insurance suitability involves several steps to ensure you’re appropriately covered without overpaying for unnecessary coverage.

Assess Your Needs

Determine what types of insurance coverage you require based on your circumstances. This could include health, life, disability insurance, or long-term care insurance. Consider factors like your age, health status, family situation, assets, and liabilities.

Research?

Investigate different insurance providers and policies available in your area. Compare coverage options, premiums, deductibles, and exclusions. You can also refer to Google for reviews and check ratings to gauge the reliability and customer care from each provider. Don’t settle for the first policy, be sure to obtain and compare quotes from these providers as well.

Evaluate Your Current Coverage

If you already have insurance policies in place, review these policies to understand what they cover and their limitations, such as whether they have certain riders and are term or whole life. You may find your current coverage meets your needs or maybe adjustments might be necessary.

Calculate Your Life Insurance Need

Multiplying your income by 10 is a common rule of thumb for life insurance and is the simplest method to determine your need. You can also refer to the DIME method- Debt, Income, Mortgage and Education. Calculate debts, multiply income by years of support needed, add mortgage and education costs. Sometimes this method can overlook existing assets, potentially leading to over insurance. Consulting a professional for a second opinion is always helpful.

Determine Risks

Evaluate the risks you face in any aspect of your life, such as health risks, accidents, or work-related risks. Be sure to choose insurance coverage that protects you against these risks.

Consider Budget

Review your budget and determine how much you can afford to spend on insurance premiums. Balance the level of coverage you need with what you can comfortably afford to pay.

Consult Your Advisor

If you’re unsure about what types or amounts of insurance coverage you need, consider consulting with your financial advisor who can provide personalized advice based on your circumstances.

Review Regularly

Life changes, so your insurance needs may change over time. Review your insurance coverage regularly, especially after major life events such as: marriage, childbirth, buying a home, changing jobs, or retiring.

Ask Questions

If you are confused about any aspect of an insurance policy, don’t hesitate to ask questions. Understand the terms, conditions, and exclusions of the policy before deciding.

As you navigate these steps, consult your Fragasso wealth advisor who can serve as a guide in selecting life insurance, ensuring that your coverage aligns appropriately with your goals and budget.

Sources: 1.https://agentsync.io/blog/producer-management/insurance-professional-standards-suitability-best-interest-and-fiduciary-explained 2.https://www.cnbc.com/select/how-much-life-insurance-do-i-need/

Investment advice offered by investment advisor representatives through Fragasso Financial Advisors, a registered investment advisor.