When the calendar turns to January, the conversation almost always shifts to finances. We set resolutions to save more, spend less, max out our 401(k)s, and perhaps finally start that investment portfolio. We focus heavily on growing our wealth, playing financial “offense.”
But a robust financial plan requires a strong defense.
If your financial strategy focuses solely on accumulation without addressing protection, you are building a castle on sand. One lawsuit, one accident, or one unexpected health event can wipe out decades of savings.
This year, as you review your budget and set your financial goals, it is time to view insurance not as a monthly expense, but as the foundation of your financial safety net. Here is how to integrate core protection strategies into your broader financial plan.
1. Protect the Engine: Disability Income Insurance
When people list their most valuable assets, they usually cite their home, their car, or their retirement accounts. In reality, your most valuable asset is your ability to earn an income.
If you are 35 years old and earning $80,000 a year, your future earning potential over the next 30 years is $2.4 million and that is without accounting for raises or inflation.
If you become too sick or injured to work, that asset disappears.
- The Financial Planning Link: You wouldn’t leave a $2 million home uninsured. Why leave a $2 million income stream uninsured?
- The Strategy: Review your employer’s Long-Term Disability (LTD) coverage. Is it enough to cover your mortgage and living expenses? If not, a private Disability Income policy bridges the gap, ensuring your financial goals stay on track even if you cannot work.
2. Protect the Future: Life Insurance
Life insurance is often misunderstood as a “death benefit.” In the context of financial planning, it is actually a “life continuity” fund.
If you were to pass away, your family’s financial obligations wouldn’t cease. The mortgage, tuition payments, and daily living expenses remain. Without life insurance, your family might be forced to liquidate the assets you worked so hard to build, selling the house or draining retirement accounts just to survive.
- The Financial Planning Link: Life insurance protects your other assets from being depleted prematurely. It ensures that the generational wealth you are trying to build actually makes it to the next generation.
- The Strategy: Move beyond the basic policy provided by your work (which is often only 1x your salary). Calculate your actual need debt payoff + income replacement + education costs and lock in a Term or Whole Life policy that secures your family’s future.
3. Protect the Assets: Umbrella Insurance
You have worked hard to build a portfolio, buy a home, and save for the future. But in our litigious society, a standard auto or home policy might not be enough to protect those assets from a major lawsuit.
If you are found liable for a serious accident where damages exceed your primary policy limits (often capped at $300k or $500k), your personal assets are fair game. A court could garnish your future wages or force the liquidation of your savings to pay the judgment.
- The Financial Planning Link: Umbrella insurance is the “moat” around your financial castle. It provides an additional layer of liability protection ($1 million to $5 million+) that sits on top of your home and auto policies.
- The Strategy: For a relatively low annual cost, an Umbrella policy provides massive peace of mind. It is one of the most cost-effective ways to protect high-net-worth goals.
How to Budget for a Stronger Safety Net
Integrating these coverages into your budget doesn’t always mean spending more; it often means spending smarter.
- Review Your Deductibles: If you have a healthy emergency fund, consider raising the deductibles on your Home and Auto policies. This lowers your premiums, freeing up cash flow that can be reallocated toward Life or Disability coverage.
- Bundle and Save: Consolidating your policies with one independent agency (like Inszone) often unlocks multi-policy discounts that make adding an Umbrella policy surprisingly affordable.
- Conduct an Annual Review: Just as you review your investment performance, you should review your insurance portfolio annually. As your net worth grows, your liability risk grows with it.
The Bottom Line
Financial freedom isn’t just about having money; it’s about keeping it.
This January, don’t just plan for growth, plan for security. Contact your Inszone Insurance agent to review your coverage gaps. Let’s make sure your safety net is as strong as your ambitions.
Juan Cruz
