What You Need to Know
- To hold down the cost of funding an annuity or other retirement income arrangement, the client should begin saving as early as possible.
- To protect the ability of the client to fund the annuity, the client should insure the house.
- To protect the house, the client should insure the ability to pay for the house.
If you’re here, you probably already help clients with retirement planning, other types of financial planning and insurance.
Even if you don’t, it’s good to take a broad approach when helping clients with personal risk planning, and to recognize that creating a sound retirement plan involves more than buying the investment that’s hot now.
Many people seem to think buying insurance is a “one and done” activity. They “set it and forget it.”
But there are many reasons why your clients should increase their insurance coverage, especially if inflation is a potential threat.
1. Retirement Planning
Consumers liked defined benefit pension plans because they knew what you were going to get once they started collecting benefits in retirement.
Your clients are likely making active efforts to use 401(k) plans, IRAs and annuities to create their own private pension.
But when are they starting to do that?
Talk to clients about setting up an annuity as early as possible, making monthly contributions through automatic monthly debits to their checking account.
Project how the money might grow over decades, and how much income clients could receive if they begin this process early.
Hazard or homeowner’s insurance is meant to repair or replace the structure, isn’t it? The Core logic Case-Shiller Home Price Index showed between September 2020 and September 2021, home prices increased by 19.5%. The National Association of Home Builders reported in June 2021 that building material prices increased 26.1% over 12 months.
Does your client have enough insurance coverage to repair or replace their home if disaster struck?
What would happen to the client’s retirement plans if a disaster destroyed an underinsured home?
Then, there’s the client. What if the client weren’t in the picture? The client’s income would vanish. Bills would keep showing up.