The other day I saw photos of a street in California inundated with rocks and mud.  One house was surrounded on 3 sides up to the roof by the mess.  In looking at it closer I saw the house had not moved and the debris had gone around the house – except where it broke the windows and flowed inside.

The way that house was built reminded me of a solid financial plan.  Both are solidly built and can withstand extreme pressures.  To do that both need to be built on solid foundations and anchored to those foundations.  

What is a solid foundation for a financial plan and how is the plan anchored to it?  In a well-constructed plan the transition is seamless, just like in a building.  The foundation will keep the plan from being destroyed in a financial storm.  As well as having a cash reserve and other assets that can be made liquid easily insurance needs to be a part of that plan.  

Insurance is not glamorous but it is vital.  In a worst case scenario, which is what insurance is designed for, insurance immediately becomes the best component of a financial plan.  As soon as an insurance policy is placed in force it is providing peace of mind but it also delivers money when money is most needed. 

We are often asked what is the best kind of insurance to own.  In order to know that I need a crystal ball to know what is going to happen to that individual during their life.  As it relates to life insurance I need to know not only when they are going to die but also how they are going to die.  Are they going to get ill before-hand and not be able to work?  Are they going to need some kind of care because they are frail and cannot take care of themselves?  How about any other losses they may suffer?  While the question is well intentioned it is miss-guided.  

We need to understand that the best kind of insurance is the kind that gives the client peace of mind and is there to pay out when needed.  Sometimes that may be a term policy while other times it will be a permanent policy.  Maybe it has a rider attached that pays in the event of a long term care need.  Each situation is unique and needs to be addressed individually.  

 

Like any good foundation it needs to be designed to support the building on top of it.  

 

• Log in or register to post comments