As Life Changes, So Should Your Risk Management Plan

Major life changes, whether planned or unplanned, are often emotional, busy, and complex. During this transition, it’s easy to overlook an important aspect of financial planning: reviewing your personal risk management plan.

Many people avoid this critical step, often due to a fear of being sold unnecessary products or simply an aversion to not wanting to think about what could go wrong in life. Ignoring the risk doesn’t make it go away.

Without a clear-eyed review of your personal risks, especially during times of change, your broader financial plans may contain gaps that could impact you and your loved ones.

The good news is that, by working with a fiduciary advisor, you have the opportunity to review both where you currently stand and where you need to be on the other side of a major life change. You can also gain peace of mind knowing that potential contingencies are being thoughtfully addressed.

A common example of such a change is starting a new job. If anyone is financially dependent on your income, it’s essential to have life insurance that you personally own and control, preferably a term policy. While many employers offer insurance options, it’s important to understand how that coverage integrates with your personal policy to ensure your family would remain financially secure if something were to happen to you.

In this same scenario, it’s also important to understand your options for income replacement in the event of a long-term disability. Make sure you’re familiar with both employer-provided benefits and any supplemental coverage you may need. Additionally, maintaining an adequate emergency cash reserve of three to six months of living expenses can bridge short term gaps.

Retirement is another major life transition and an especially important time to reassess your risk management plan. At this stage, the need for life insurance is often significantly reduced or entirely gone if your savings are enough to cover living expenses and you’re no longer reliant on earning an income. Still, it’s worth taking a thoughtful look at your coverage, discussing your options, and deciding whether keeping a term policy in place makes sense based on your personal goals and circumstances.

Are you retiring prior to the age of 65 and before Medicare eligibility? If so, one of your top planning priorities will be addressing the health insurance gap. This can often be filled by continuing your workplace coverage through COBRA or purchasing a policy through your state’s insurance marketplace.

Also, if you previously purchased individual disability insurance to protect your income for your family, be sure to cancel that coverage at retirement. Once you’re no longer earning income, there’s no longer a need for that protection.

Whenever you’re navigating a meaningful life change, it’s important not only to consider the impact on your long-term financial plans but also to reassess your personal risk exposure. Your risk may have shifted, your insurance needs may have changed, and new options may now be available to you.

Your fiduciary advisor can guide you through this conversation without any hidden agenda. Our priority is always your best interests, your best plan, and giving you and your family the highest probability of successfully navigating change and uncertainty.

Disclosures:

Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. A copy of Apella’s current written disclosure brochure filed with the SEC which discusses among other things, Apella’s business practices, services and fees, is available through the SEC's website at: www.adviserinfo.sec.gov. No current or prospective client should assume any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.