Protection Planning- The Forgotten Asset

By: Mike Long

A comprehensive financial plan should contain some form of protection planning. That protection is usually provided through different forms of insurance. Life insurance is usually at the core of any financial protection plan, but this can sometimes be the “forgotten” asset. Life insurance can be overlooked due to many reasons; one major reason is that it’s hard to view life insurance as an asset when you’re paying for something (protection) while hoping you never have to use it.

During difficult economic times life insurance can become a valuable tool to use within your financial planning. Certain advantages such as cash accumulation, tax sheltering, and liability protection may become very beneficial to a portfolio containing more traditional assets. Traditional assets tend to draw attention during market downturns, but it is just as important to regularly review any life insurance held with in your portfolio. Things to consider when reviewing your life insurance protection plan are as follows:

1) Have the assets I am attempting to protect increased or decreased?

2) Can I reduce the cost of the insurance I currently own?

3) Does the type of insurance I own still meet my needs?

4) Are there investments with in my insurance contracts that need to be reviewed – including cash values?

5) Do my beneficiaries understand what the plan is if something were to happen to me?