Insurance is as important to comprehensive financial planning in San Antonio, TX as budgeting, investing, or saving for retirement. Why? Insurance manages the risk that all of us face in life, and managing risk is a major part of financial planning. After all, you would know that if you spend heedlessly without regard to your income, you could place yourself and your family at risk of running out of money or going into debt.
If you invest in an asset without any idea whether it will rise in value, that’s also risk – not a prudent idea, and not in accordance with the spiritual values of proper stewardship of your money. Going without life or health insurance exposes you to risk, and thus poor stewardship, as well.
Life insurance is intended to pay your survivors a benefit in case you pass away. If you have family members dependent on you financially, it’s prudent to have life insurance, as the policy will continue to give them financial support. Even when your children are grown, life insurance policies can help your spouse financially by providing for them in retirement or covering funeral expenses.
Health insurance covers you for needed medical treatment, including premiums, deductibles, and copays. Healthcare treatment without insurance is very expensive, and the cost is expected to continue to rise over the next few years. Since everyone eventually needs medical care, health insurance is virtually a must-have. Illnesses or accidents without health insurance could lead to draining your assets.
Ultimately, you need to consider both life and health insurance as part of your financial plan.
Here’s some advice on shopping for both:
1. Know Your Insurance Needs
As with every other type of financial product, it pays to know what your needs are.
For life insurance, evaluate your situation carefully. Do you have young children? Then you’ll likely want a life insurance policy that can support them into adulthood. You may want a life insurance policy that will pay for their higher education. What if you’re older? If your children are grown, you may want a life insurance policy that will help your spouse in some way financially, such as paying off the mortgage in the event of your death.
Similarly, evaluate your circumstances for health insurance. If your healthcare coverage is provided through your employer, look at what is covered. If you are self-employed, you may need to shop for your own policy. If you are retired, most Americans are covered through Medicare. It’s important to know, though, that Medicare doesn’t automatically cover everything. You may need to opt for prescription medication coverage, for example, if you want it. Many people also choose a Medigap plan through private insurers that financially covers the costs Medicare doesn’t, such as deductibles and copays.
Most private health insurance policies cover doctor’s office visits, hospital visits, and prescription medication, but not all cover vision care, dental, or mental health. Do you have a specific need for these? If you have young children, does your policy cover pediatric visits comfortably? If you are older, does it cover everything you might need, as older people may develop more chronic and/or serious medical conditions?
Consider the cost as well. If you are young and relatively healthy, you may be able to get a more cost-effective policy if you go with a high deductible.
2. Always Comparison Shop
Insurance policies can vary in coverage, price, and other details. You should shop around carefully for each type of policy.
Once you know your needs, shop for carriers that can fill those needs. Read the policies carefully and compare prices.
Many people think that if they stay with one insurance carrier for multiple policies, they’ll receive a discount on the cost of their policies. This can be true, but it isn’t necessarily true. (It’s also more likely to be true with home and vehicle insurance than with life and health insurance.) Many different factors affect the cost of insurance.
A lot of people also think it’s a good idea to consult an insurance broker. Brokers, however, may work and receive commissions from a limited number of companies. As a result, they may be more prone to provide insurance from the carriers they work with rather than the ones that may best fill your needs.
A comprehensive financial advisory firm like PAX Financial Group can help you comparison shop from a wide number of insurance providers, ensuring that the coverage both fits your needs and is reasonable in price.
3. Revisit Your Coverage Periodically
One of the most important actions when shopping for life and health insurance is periodically revisiting your coverage. Your needs don’t stay the same throughout your life.
You may, for example, need life insurance when your children are small. But as they age, you may have less need for it. If you switch to a policy with a smaller benefit, your costs go down.
You also might want to consider different types of life insurance throughout your life. There are two types, term and universal (whole) life. Term insurance is only valid for a certain period of years (the term). It is also less expensive. If your concern is to pay for a child’s higher education or to pay off a mortgage for your spouse, a term policy can be purchased to cover the years when the child will be attending school or the span where your spouse will still have mortgage payments. After your child graduates or the house is paid off, the life insurance can lapse because it will no longer be needed.
It’s a good idea to re-evaluate your health insurance at each relevant event in your life. Relevant events could be the birth of children – they’ll need coverage and perhaps it’s time to comparison shop for family policies – or a spouse taking a new job and becoming covered under a new policy.
PAX Financial Group Can Help With Your Insurance Needs
At PAX Financial Group, we believe that your spiritual values should be supported by your financial choices. Life and health insurance are risk management practices but they aren’t just that: they are expressions of your stewardship of your resources. Our CERTIFIED FINANCIAL PLANNER™ Professionals in San Antonio, TX can help you identify the best types of life and health insurance for you and your needs and the most cost-effective, as part of a balanced financial plan.
