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5 Ways to Align Your Insurance and Wealth Planning

Terry Bobo

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

How insurance fits in a financial plan

When do you ever think about insurance? For many of us, it’s only top of mind when we need to purchase new coverage, when we need to use it, 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 deserves to be an integral part of every conversation about your overall wealth management picture. As a cornerstone of your comprehensive financial planning process, insurance helps account for the risks that you cannot afford to bear yourself. 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 after you’re gone, and leaving a legacy.

In my 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.

Here are five key steps you can take to start aligning your insurance and wealth management strategy.


1) Make sure your coverage keeps up with your assets

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 rise an average of three to five percent per year, with double-digit growth in some of the hottest 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.

A wealth 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 or RV, 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 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. Unless your employer provides some type of disability coverage, the unexpected loss of a paycheck could quickly deplete your savings or retirement assets.

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 protecting the loss of your income can add invaluable 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 age 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 cost of care in your area, 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, and your assets.


5) The value of impartial guidance

With hundreds of different coverage options available from national and regional insurance carriers, finding the right plan for your specific needs can be a complex, time-intensive burden. Additionally, many insurance agents 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 wealth management advisor that understands the importance of integrating insurance into your broader wealth management plan, and understands the tools and resources necessary to review, analyze, and compare your options.

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. Here are some important details you’ll want to have 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.


Simplicity and confidence

While insurance can sometimes seem like just a necessity that we set up and then forget about, it plays a far more valuable role in fulfilling your long-term financial goals. As part of our commitment to guiding clients through every stage of their financial journey, we help them see how insurance integrates into their total wealth management picture. Our Insurance Solutions Group is company and product-agnostic — providing life, property & casualty, long-term care and disability insurance as well as annuity guidance, and has the ability to partner with third-party insurance providers to compare policy offerings from dozens of carriers nationwide.

Our priority is to find our clients the absolute best solutions that meet their unique needs.

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 toward the future you’ve envisioned.

Terry Bobo began his career in the financial services and insurance industry in 1999. He has worked for such firms as MetLife, John Hancock, and Edward Jones. He specializes in incorporating insurance and risk management solutions into the overall financial planning process.

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.

Mercer Advisors Inc. is the 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 to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

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