Roadblock #8 — Self-Insurance Mistakes

Insurance should be the foundation of your financial picture.

It’s hard to find a person who’s had an insurance claim say,

“You know, I really just had way too much insurance.” What would you say if your employer offers to pay for a $1 million life insurance policy for you? All you have to do is check the
right box, “Yes I’ll take it”, sign your name and the insurance coverage is in place. Like most people, you probably thought, “Well if you put it that way, of course I’ll take the additional
insurance protection!” You wouldn’t need to crunch some numbers, do a financial plan or decide whether you needed it or not. What this proves is that insurance is something that
we all want.

It always comes down to cost.

You might have had the feeling of being upside down with the order in which you’ve lived your financial life. You might have spent too much and lived beyond your means, incurred short-term debt, your house might be too big and you might be saving at a dangerously low level for your financial futures. After all of that’s considered and in place, then you’ve tried to figure out if there’s anything left for insurance. A smoother path is to make sure that your today’s are properly and thoroughly protected before any consideration is given to your tomorrows. Your tomorrows are not addressed while leaving you exposed against what might happen today. In living by a protection first philosophy, surprises in life will not derail your financial future.

Why protection first?

Your protection thought process should include a lifetime of protection with the idea that you’re never going to be in a better position by being self-insured, but always be better served by being fully insured on an ongoing basis. You want to be able to lower your protection costs while increasing the amount of coverage you have in every area of your life. It is important to have a level of protection that’s equal to that value of the item being replaced, including:

• The same car if it were stolen or totaled
• The same house if it were to be flooded
• The same ring or piece of jewelry if it were lost
• Most importantly… the same life value

It is key to financial success to break through the common misconceptions of “I’ll no longer need insurance someday, and I’ll be able to drop it.” Or, “I’ll build my balance sheet up
to the point where I’ll be able to self-insure.” Let it be that the insurance amounts are equal to the property being protected and design your protection portfolio so that it stands the
test of time and lasts as long as your life does – and longer