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The Most Common Oversights in Personal Planning
By Robert A. Bensman, CLU, ChFC, RHU®
Improper planning is often a result of not devoting enough time to creating a personal plan and keeping it current. Given the demanding schedules that most of us have and the perceived lack of urgency regarding the plan, it is likely that at least part of your plan is out of date.
And the results could be devastating, including unnecessary uninsured exposures, higher income and/or estate taxes than necessary, not having the assets you need when you need them, and your assets not being passed to your beneficiaries as you intended. At its most extreme, an outdated or nonexistent plan can lead to bankruptcy or even a health crisis, since taking care of your health also should be part of your plan.
A quick look at some basic issues should help you determine whether you are up to date, or whether it is time to begin an integrated review of your personal plan. Remember that your physical and financial health may be considered your most valuable assets.
Here are the most common oversights in a personal plan:
Personal Property and Casualty Insurance
- Insufficient liability limits on auto, home and personal umbrella policies.
- Deductibles that are inappropriate and/or not cost-effective.
- Failure to include appropriate named insureds on liability and home policies, especially where other individuals, trusts and/or LLCs hold titles.
- Unreasonable restrictions or contractual limitations in your policies.
- Failure to "schedule" valuable items on your policy.
- Not informing your broker of recent purchases, gifts, etc., so that your coverage can be updated.
- An estate plan that is outdated.
- Lack of income and/or estate tax-planning strategies.
- Inappropriate ownership of assets.
- Inappropriate beneficiaries.
- Outdated or nonexistent powers of attorney, living wills, etc.
- Lack of a letter of direction for executing the estate plan.
- Not utilizing an IPS (Investment Policy Statement).
- Poor or inappropriate asset allocation.
- Inappropriate benchmark(s).
- Not reviewing your asset holdings regularly.
- Paying too much in taxes.
- Paying expenses and/or fees that are too high.
- Lack of a financial or retirement plan.
Business (Commercial) Insurance
- An insufficient amount of coverage for your current needs, based on your liquidity, assets, and legal or moral obligations.
- The wrong type of policies.
- Policies that are not cost-effective.
- Improper policyowner or beneficiaries.
- Policies that are underperforming.
Long-Term Disability Coverage
- Insufficient liability limits.
- Lack of or insufficient Directors & Officers and professional liability insurance.
- Lack of or insufficient employee benefit liability coverage.
- Lack of or insufficient improper termination coverage.
- Improper valuation of building, contents, inventories, etc.
- A group policy that covers only base salary, not bonuses or incentive compensation.
- A group policy in which the monthly benefit is taxable income when received.
- An inappropriate definition of disability.
- A group policy that is not portable.
- Contractual limitations, such as on mental, emotional or self-inflicted disability.
- Lack of a long-term care plan.
- Insufficient assets/income to handle future needs.
- Inadequate insurance (if needed).
- Lack of appropriate legal documents.
- Failure to maintain health as a way to reduce future need for care.
- Not having defined goals.
- Not having “baseline” testing.
- Insufficient cardio and strength training.
- Not having easy access to medical records.
- Poor nutrition.
At The Bensman Group, we can help you review your plan and update it when necessary, so that you can be confident you have prepared well for yourself and the people you love. To set up an appointment, just call us at 847-572-0800.