Difficult discussions shouldn’t scare people away from exploring
insurance options. It’s a critical part of protecting the money you’ve
worked for and the people you care about.
“We have a duty to provide holistic planning to meet your goals and
take smart steps to protect your progress. That includes making a
roadmap to meet your goals and taking steps to protect your progress,”
Schoonderwoerd says.
Wealth advisors can help people determine the type and amount of
coverage they need to meet their goals, including things like debt
servicing, savings, or income replacement.
Schoonderwoerd says the top insurance categories are health and life.
Health insurance is commonly broken into two categories: disability
and critical illness.
“Disability insurance helps replace lost income and pays out for a
term until you can return to work. Critical illness pays a one-time,
lump-sum payment for particular conditions. It pays out once, and the
contract is done,” Schoonderwoerd says.
Life insurance offers more options.
Term insurance has lower initial premiums. It is most commonly sold
in 10 or 20-year policies designed to cover temporary costs that go
away over time — things like debt repayments, mortgages, the cost of
raising kids, or new business expenses. However, longer-term policies
can get quite expensive, and most people “leapfrog” into a more
permanent insurance product as their temporary expenses fall away,
Schoonderwoerd adds.
He recommends most people have some insurance in place by the time
they are 60.
Permanent insurance can offer a death benefit or cash value, or
both. In addition, some term plans can be converted into permanent plans.
“There are two kinds of permanent insurance too,” Schoonderwoerd
says. “Universal offers flexibility to reduce or increase the benefit
by adjusting premiums. Whole life offers a guaranteed value, but it
can be more expensive.”
Knowing which type of insurance is right depends on several factors,
including age, the state of your health, affordability, and whether
you own a business.
Schoonderwoerd says people who take the time to explore their
options come away with a strong appreciation for insurance and the
value of seeking expert advice.
So, the next time someone asks them about insurance, they can say,
“I’m good, thanks,” and be sure it’s true.
