Should insurance be a part of my financial plan? | Part 1

Insurance plays an important role in your financial security, but you need to identify how it fits into your larger financial plan. What risks can you afford to take? How will changes in your health, assets, and income affect your plan? Today we present part 1, and will examine the general considerations and questions for including this protection into your financial plan. Part 2 will address specific insurance types, and their risks & advantages.

Mention estate planning and insurance in one sentence and people tune out! Nonetheless…it is an important topic to consider and one where you should have a real framework in place before making decisions. So we will forge ahead. I hope you join in.

A Good Financial Plan

When you step back and think about insurance, you need to realize that before plunging ahead and securing insurance, you need to identify what role that insurance is playing in your larger financial plan. Questions to ask to identify needs.

  • Where are your personal risks?
  • Are you willing to bear them?
  • Do you want protection for some or part of the risk?
  • How do you determine how much protection?
  • Can that protection be employed in ways that would be really useful in your personal plan?
  • When do you implement purchasing that protection?

Only when you have a good financial plan in place, can you identify exposures. Prior to that, you would likely be buying insurance because you think it is a good idea but without knowing the clear role that it will play in your financial protection. Once you have a financial plan, you can see where you are vulnerable. Here are 5 considerations to identify where you might need protection.

  1. Do you need protection for your work income?
  2. Do you need a liquid asset to help pay estate taxes to insure that a larger portion of your estate passes to your heirs?
  3. Are you concerned about your health and how you are cared for as you age?
  4. Do you have adequate resources to secure the type of care that you want?
  5. What are the costs of the protection from insurance and can you afford them?

These are very personal questions. There is no single right answer! In fact, every individual will have a different assessment of what role insurance might play for them. That is why it is important to tie this decision to your financial plan and goals, just as you would any of your other financial, investment and estate planning decisions.

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Janice Deringer


Janice L. Deringer is a member of Wipfli Financial's Investment Committee and a consultant who focuses on serving individual and corporate clients. She brings over 20 years of institutional investment management experience to her strong interest in educating women and individuals regarding financial decisions, realities and possibilities.

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Should insurance be a part of my financial plan? | Part 1

time to read: 2 min