Risk management

The right amount depends entirely on what you need it to do — and that answer is different for every household. For most working families, the primary purpose is income replacement: if you were gone tomorrow, how much would your survivors need to maintain their standard of living, pay off debt, fund education, and retire on schedule? We model that number carefully, accounting for inflation, expected investment returns, and Social Security survivor benefits your household would actually receive.

Beyond income replacement, life insurance serves different roles at different life stages. For business owners, it may fund a buy-sell agreement or key person coverage. For high-net-worth households, permanent insurance can provide estate liquidity to settle estate taxes without forcing asset sales. For some clients in the right tax situation, certain permanent life structures are a legitimate component of a tax-diversified retirement strategy. We also evaluate existing policies — many older whole life and universal life contracts have experienced significant performance erosion that warrants a formal review.

Group disability is a starting point, not a complete solution. Most group plans cap benefits at 60% of base salary — and if your employer paid the premiums, those benefits are fully taxable as ordinary income when you receive them. For most professionals, the real after-tax replacement rate lands closer to 40–45% of pre-disability earnings.

Group policies are also typically own-occupation for a limited period — often just two years — before switching to a more restrictive any-occupation definition. For surgeons, attorneys, financial advisors, and business owners, that distinction matters enormously. And critically, group coverage ends when your employment does. An individually owned, non-cancelable policy cannot be changed or cancelled by the carrier as long as you pay the premium — making it portable, predictable, and independent of any employer's benefits decisions. The Social Security Administration estimates 1 in 4 workers will experience a disabling condition lasting 90 days or more before retirement. (SSA, 2023.) For most professionals, that risk is worth insuring individually.

Earlier than most people expect — and well before a health event makes the decision for you. Long-term care insurance is underwritten based on your health at application. Waiting until your late 60s or 70s increases the risk of being declined or rated, and at that point options narrow significantly. The planning window most advisors recommend is the mid-50s to early 60s, when premiums are still manageable and health is typically still insurable. Premiums are also materially lower the younger you apply — someone who locks in coverage at 55 will pay substantially less over their lifetime than someone who waits until 65, assuming they can still qualify at all.

For clients who prefer to self-insure, we model that scenario honestly: which assets would need to be liquidated, what is the tax impact, and what does it do to a surviving spouse's financial security. The U.S. Department of Health and Human Services estimates 70% of Americans turning 65 will need some form of long-term care, with median costs for a private nursing home exceeding $108,000 per year nationally (Genworth Cost of Care Survey, 2023). For most households, transferring at least a portion of that risk makes financial sense — but the right vehicle depends on health, budget, and overall plan design.