Insure Before You Invest

Building wealth is important, and saving for retirement should always be top of mind when developing a saving and investing plan. However, the very first step to take before investing is to ensure you're insured against life's curveballs.

Building wealth is important, and saving for retirement should always be top of mind when developing a saving and investing plan. But many people—physicians included—don’t pay enough attention to a step that should take place before you even begin an investing strategy: making sure you are insured against life’s curveballs.

Health Insurance

As we discussed recently here, even those who work in healthcare are often unprepared with adequate health insurance—particularly as they near their retirement years and face the possibility of losing their workplace benefit package. We won’t reiterate all the points covered there, but the key point is to make sure you have a plan in place in case you lose your current job or decide to retire. Look into a health savings account (HSA) or long-term care insurance. And always keep enough cash and liquid savings on hand to help you take care of any immediate, short-term medical needs.

Disability Insurance

No one expects to become disabled, and many people think that if they do become disabled, they will be covered by workplace or government plans. While this may be true in some cases, that coverage may not be there for all conditions, and it may not be enough if you have dependents. Additional disability insurance can provide monthly income in the event that you are unable to work due to a sickness or injury. Many employers offer disability insurance as an extension of your health plan, and your state’s insurance department offers some options as well. Look carefully, though, at the plan information to make sure you know what is considered a disability and if there are limitations on the income you can expect.

Home and Auto Insurance

You know that you have to have auto insurance if you have a car…the GEICO gecko and Progressive’s Flo may seem like good friends of yours, as often as you see them on television. But did you know that you can also cover boats, motorcycles, and recreational vehicles as well? Homeowner’s insurance is an absolute necessity as well. Look closely at the plan information to make sure hazards, such as floods and earthquakes, are covered; if not, you may need additional coverage. Also, you don’t have to own a home to have renter policy. And if you maintain a vacation home or an investment property, make sure you have adequate coverage for those locations as well.

Life Insurance

This is a much bigger topic, and one that we’ll cover in depth in several upcoming features. The reasons to get life insurance are pretty clear, and most people recognize that it’s an essential piece of the financial puzzle. But there are many different kinds of life insurance and many types of policies. Many of them, including annuities, have a direct connection to your retirement savings as well. We’ll cover the 2 basic types of insurance—term and permanent—in an upcoming multi-part article.

One thing many people understand but may overlook is that as your life changes, your insurance needs will as well. This can include:

• An increase or decrease in income, including the decision to retire

An inheritance

A bankruptcy

An illness or disability

Birth of a child

Death of a loved one

Change in marital status

Change in value of real estate holdings, or a move to another state

Employment status

Accumulation of valuables

Not all of the above will necessitate a change in your insurance needs and coverage. But they should all trigger some additional evaluation of your current insurance needs.