5 Ways to Align Your Insurance and Wealth Planning

Steve Scothorn

Director of Insurance Solutions


Explore how an integrated approach to insurance and wealth management can help you better protect your estate and reach your financial goals.

How insurance fits in a financial plan

When do you think about insurance? For many of us, it’s only top of mind when we need to purchase new coverage, at renewal time, when we get a rate increase, when a loss happens to someone we know, or unfortunately, when it’s too late. The rest of the time, insurance policies mostly stay tucked away in the back of a drawer and the back of our minds.

However, insurance is an integral part of every conversation about your overall financial planning picture. As a cornerstone of your comprehensive planning process, insurance helps account for the risks that you cannot afford to bear yourself. It’s the best safety net for the worst-case scenarios that could torpedo your financial plan. Having the right insurance not only protects your physical and financial assets but also helps you achieve your long-term goals – retiring comfortably, living independently, providing for your family, leaving a legacy, and most importantly, peace of mind.

With more than 20-plus years of helping clients think more holistically about the role insurance plays in financial planning, I have found that one of the first and biggest challenges can be figuring out what questions to ask. That’s where the help of a knowledgeable wealth manager can be invaluable.

Take these five key steps to align your insurance and wealth management strategy:

1. Make sure your coverage keeps up with your life – both today and tomorrow
When an insurance policy sits idle year after year, gaps can grow between the insured value of your assets and their actual market value. Case in point: Home prices consistently rising year over year in certain markets.

Unless you’re reviewing and adjusting your homeowner’s coverage at least annually, there’s a good chance you may be underinsured in the event of fire, flooding, or some other catastrophic loss. Similarly, a policy written 10 or 15 years ago might not include the increased value of items such as jewelry, artwork, a kitchen remodel, or the deck you installed last summer, let alone protect against a failed sump pump or hot water heater.

An advisor who’s directly involved in your comprehensive financial plan and who meets with you several times a year will have the insight to help address any gaps before they become costly issues. With the help of your advisor, you can also more easily look ahead to assess how future wealth management goals, such as buying a retirement home, RV, or gifting to your favorite charity could shape your insurance needs.

2. Consider taxes when setting up life insurance and annuities

Life insurance can be one of your most effective tools for efficiently transferring wealth to a spouse or other family members. By working with a qualified financial advisor to align your life insurance with other elements of your estate plan, you may also find opportunities to mitigate any potential tax burden for your beneficiaries.

For example, your advisor can help structure your insurance policy to avoid creating further estate and tax liability and help ensure your beneficiaries receive the policy proceeds income tax-free. An advisor with knowledge of your financial situation can also help align your life insurance with your overall financial plan, goals, and objectives and structure your assets in the most tax-favored manner with properly named beneficiaries.

3. Protect against a sudden income loss

Another easily overlooked risk, especially for people who are the primary income earners in their household, is loss of work due to short-term or long-term disability. One of your greatest assets is your ability to earn an income. When cash flow slows or stops, it can drastically undermine your financial plan. Unless your employer provides some type of disability coverage, the unexpected loss of a paycheck could quickly deplete your savings or retirement assets. Having employer-sponsored disability coverage helps, but the protection could be lost once you stop working for the company. On the other hand, individual disability insurance is portable and can be added to your company’s coverage. This means that when your employment ends, you can keep the coverage up to age 67 if you wish.

With an advisor who makes insurance a regular part of your review process, you have more opportunities to put appropriate safeguards around your income. Whether you opt to purchase disability insurance, create an emergency pool of available cash, or make other contingency plans, taking a holistic approach to protect the loss of your income can add peace of mind for you and your family.

4. Weigh potential long-term care needs

As you plan for retirement, one of your primary goals should be ensuring that you’ll have sufficient assets to live comfortably for several more decades. If you or a partner have a long-term care need during that time – which is a realistic possibility for about half of all Americans aged 65 and older – the costs involved could be devastating.

Long-term care (LTC) insurance is a solution that makes good financial sense for many, but several factors need to be considered. These include your age at the time you purchase a policy, your net worth and asset mix, the variable cost of care around the country, as well as the benefits covered by a policy. Due to all the considerations involved, having a financial advisor review your specific situation and the LTC options in the context of your larger wealth management plan, can help you determine if LTC insurance is right for you and confidently protect your retirement, your family, your assets, and your dreams.

5. The value of impartial guidance

With hundreds of different coverage options available from insurance carriers, finding the right plan for your specific needs can be complex and time intensive. Additionally, many insurance agents only offer coverage through a single company. As a result, you could easily miss opportunities to obtain a lower rate, better benefits, or full protection in all areas where you need it.

You can overcome these challenges by seeking out a financial advisor who understands the importance of integrating insurance into your broader wealth management plan and has the tools and resources necessary to review, analyze, and compare options best suited for your life now and in the future. Even if you prefer to remain with your current insurance carriers and policies, bringing a financial advisor’s perspective into the mix can help you make strategic adjustments in coverage as your needs evolve. A trusted and responsive advisor should be more than happy to join that type of dialogue.

What you’ll need for the conversation

As you prepare to discuss insurance options with a financial consultant, a little advance homework will help make your session much more informative. Make sure to have this information on hand:

  • Copies of all current insurance policies, including premium amounts and coverage summaries.
  • Descriptions of any additional coverage available to you through employers, government programs, and organizations such as AAA or AARP.
  • Information about home or business mortgages and valuations; your automobiles and other vehicles, such as a boat or aircraft; and other valuable possessions in your home.
  • Information about your personal and family health history that might be relevant to long-term financial planning.

Insurance Solutions – our priority is finding the best coverage to meet each client’s unique needs

While insurance can sometimes seem like a necessity that we set up and then forget about, it plays a far more valuable role in fulfilling long-term financial goals. As part of our commitment to guiding clients through every stage of their financial journey, Insurance Solutions is carrier-agnostic. This means we are not limited to products, investments, or companies. Instead, by partnering with third-party providers from renowned nationwide carriers, Insurance Solutions focuses on finding the highest-quality coverage that best meets each client’s needs and integrates into their total wealth management picture.

When all is said and done, insurance is an asset that protects against the seen and unforeseen, simplifying your life and providing peace of mind as you move confidently through your financial planning and wealth management journey. If you’re a current Mercer Advisors client and would like more information on life insurance, long-term care, annuities, property & casualty insurance, or disability insurance, contact your financial advisor. If you are not a client, let’s talk.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or product or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

Mercer Global Advisors has a related insurance agency. Mercer Advisors Insurance Services, LLC (MAIS) is a wholly owned subsidiary of Mercer Advisors Inc. Employees of Mercer Global Advisors serve as officers of MAIS. MAIS provides individual life, disability, long term care coverage, and property and casualty coverage through various insurance companies. For Mercer Global Advisors clients who wish to purchase insurance products, MAIS has entered into a non-exclusive referral agreement with Strategic Partner(s), where the Strategic Partner will provide necessary services relative to the marketing, placement, and servicing of the insurance products, including without limitation preparing and presenting illustrations, supporting the underwriting process, assisting with the completion and execution of applications, delivering policies, and servicing in-force business. MAIS and the Strategic Partner will be listed as “co-agents” on the policies. While Mercer Global Advisors does not receive a referral fee, MAIS and the Strategic Partner each receives a percentage of the commission revenue. More information about MAIS and our Strategic Partners may be found in our Form ADV 2A.

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