Basic Life Insurance Planning Concepts

Insurance planning and risk management is one of the core components of the financial planning process. Insurance is a financial tool that transfers the risk of financial loss from one party, the insured, to another party, the insurance carrier. When there is an insurance claim, the insurer restores the economic loss, in whole or in part. A solid plan oftentimes includes insurance to cover property (personal property, real estate, automobile, etc.), liability (negligence, torts, etc.), and personal risk (death, disability, poor health, etc.).

For many, life insurance is among the more important types of coverage for individuals and families to have. There are three key questions when considering life insurance as part of your financial plan — how much do you need, how long should the coverage be in place, and what is doable from a cash-flow perspective.

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