The easiest and most cost-effective way for most people to mitigate these risks is through insurance products, such as disability, life and long-term-care insurance. That may be common knowledge, but discomfort with the subjects and the complexity of insurance products prevent many people from obtaining necessary coverage in advance of a life-changing event.

To know and not to do is not yet to know. In other words, to know there is a risk, for example, and yet not to act upon that risk can leave disastrous holes in your retirement plan, your end-of-life care, or your estate itself. While it is not the only financial planning tool in the tool chest, many financial plans could benefit from an insurance to solve myriad risks.

The kinds of insurances we are “required” to buy help us with the minor bumps and scrapes in life and are sometimes easy to think about, shop for or ensure that we have adequate coverage. Auto and homeowners insurance, for example, come immediately to mind.

On the other hand, disability insurance, long-term care insurance and life insurance are another matter entirely. As USA Today points out in a recent article titled “Insurance is most ignored in financial planning,” these three insurances are all too often ignored, misunderstood and difficult to think about emotionally. Nevertheless, they are often essential.

Insurance is, quite literally, a product you purchase to solve a risk. It is peace of mind. Without fail, insurance is more cost effective than coping with a disaster. To become disabled, especially late in life, is to lose income that may be necessary for you and your loved ones. Disability insurance can mitigate this. Likewise, with the rising costs of medical care and seeming inevitability of requiring a good deal of elder care, long-term care insurance can step in when the medical needs are overwhelming. And finally, life insurance helps eliminate the risk your family faces without you and your income.

Each type of insurance is well worth your consideration, and each can be budgeted to fit within a comprehensive financial plan.

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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