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Asset protection is an area where diligence and a continual focus are important. Many of the solutions can be very cost effective, but the amounts and types of insurance needed will be ever-changing. For example, when you finally buy your house, renter’s insurance will no longer be necessary and will be replaced with a home owner’s policy. Working with a financial planner along the way will help you to answer the myriad of questions that will undoubtedly arise.

Life Insurance

• It will be important for each of you to maintain affordable life insurance coverage, which is typically used to protect your spouse in case of an untimely death.  
• Ethan provides a majority of the financial support for your family at this time. Given this, we feel he should have insurance sufficient to provide his current income level. With an annual income of $42,000, he would need to buy a 15-20 year level premium term life policy with a death benefit of $750,000-$1,000,000.
• Isabella’s income is equally important to insure, and she has the added consideration of making sure Scott has the necessary resources for health, maintenance, education and support. We feel Isabella should purchase a 15-20 year level premium term life insurance policy with a death benefit of $350,000.
  • $175,000 of this benefit will cover her current income for 30-40 years.
  • $175,000 of this benefit will be used to provide for Scott’s well-being, including his potential costs of education.
  • Isabella should name Ethan as 50 percent beneficiary, and set up a trust for Scott in her will as 50 percent beneficiary.
• Term life insurance will offer the most affordable solution to your life insurance needs.
• The 15-year or 20-year policy you would purchase will expire in those respective time frames. You should periodically revisit your insurance policies to make sure they continue to meet your personal needs.
• The amount of needed insurance will change as your incomes increase, and other obligations exist.  

• Also, discuss the impact buying a house may have on your needed life insurance amounts.

Disability Income Protection

• While life insurance will protect your family in the event of an untimely death, you will also need protection from loss of income due to disability.
• Typically you should purchase an insurance policy, or maintain a combination of insurance policies, that will provide 65 percent of your current income in case you become disabled and are unable to work.
• Many employers offer disability insurance as a benefit of employment. We will want to examine those options before looking at private insurance solutions.
• As you might expect, the loss of a job means the loss of “group” insurance policies. Each job loss/change in the future would necessitate a re-examination of your disability income protection.
• The information provided for Ethan’s coverage with his current insurer is somewhat vague about what it actually covers.  
• We would like the opportunity to review the full policy before making specific recommendations in this area.
• It is possible that additional insurance would be needed to protect you from full disability.

Renter's Insurance

• As a renter, the structure you live in is insured by the owner(s) of the property against loss from fire, weather, etc.
• However, your personal property is often not covered by their policies, leaving you at risk of significant loss in such cases.
• You should contact a property/casualty insurance agent about obtaining renters insurance right away.
• This insurance is typically very affordable.
• Be very specific about the value of larger items, as they may need special consideration in any policy.
• Keep photos or video records of your valuables in a fire-proof box to aid in any claim situations.

Auto Insurance

We welcome the opportunity to more fully examine your auto insurance policies to ensure that your coverage and deductibles are appropriate given your current situation.

Liability Protection

This is also known as “umbrella” liability insurance. Liability protection will become more important once you own a home. This type of protection will supplement the liability limits of your home and auto policies. Having said that, you should approach your auto insurer to see if additional liability coverage is available to you at this time. A $1 million umbrella liability coverage would be sufficient in covering additional liability needs. If/when Ethan owns his own auto body shop, it will be important to weigh the additional liability needs at that time.

Health Insurance

• Maintain Ethan’s health insurance through his employer.
  • Inquire about whether Ethan has the option of adding Isabella to his group policy. If not available now, this will become possible at the time of marriage.
• Maintain Scott’s health insurance coverage through the United States Air Force (USAF).
• It is important that Isabella get health insurance coverage for herself. Any major medical issue while uninsured could be financially devastating!
  • If inclusion in Ethan’s group policy is not possible, first approach Isabella’s employer about possible insurance options.
  • When all other options have been examined, it will be necessary to look at private coverage, or a public option, to guarantee Isabella is covered.
  • Examine all private options first, including more cost-effective high deductible plans that will offer catastrophic coverage.
  • As the public health care solutions are solidified in the coming months, care should be taken to examine options available under new legislation.