I am very thankful that I ended up with a well-rounded background. It wasn't a well thought out plan. Rather, it just happened. But it helps us serve clients well and holistically. For example, when I was finishing my degree, I worked for a large insurance company who had what is arguably the best training program in the industry. We studied insurance contracts by dissecting them word by word. I somewhat jokingly say that I've forgotten more about insurance than most people will ever know.
This week I put my past experience to work by reviewing a client's auto, homeowners, boat, and long term care insurance policies. I want all of my clients to have a comprehensive insurance plan that makes sense, and I don't want them to be over insured, nor underinsured. We are going to be making a lot of changes - both adding and dropping some coverages. Of course, we'll be consulting with their insurance agent because the insurance industry is constantly changing and I'm no longer licensed in property and casualty insurance. The way we handle this in my office is to hold a three way conference call with the clients, the insurance company, and myself.
The most impactful change we're going to make is that their auto insurance premium seemed high. I noticed that the policy says that they are "rated", which means that they're both being charged for adverse driving records, yet the policy also lists "violation free and accident free" discounts. It looks as though they are being given discounts for good driving records then upcharged for bad driving records.
My points: 1) The term holistic planning is over-used in our industry. Holistic planning should actually be holistic which should include a thorough review of all insurance, debt management, employee benefit discussions, and many other things that are often not included in the financial planning process.
2. If you haven't had someone dissect your insurance policies, you should. Most people have a vague idea about what's covered, at best. You could be paying too much for coverage that doesn't make sense. You could be over-insured or under-insured.
One of the biggest problems with insurance is that, when we're purchasing it, all we care about is how low we can get the premium. However, when we have a claim, we want every small loss to be covered. These two goals are not congruent.
If you have not had your insurance plan reviewed in a while, or you're considering engaging a financial advisor, please call the office to schedule a time to talk to see if we'd make a good team.