Contributed by: Kelsey Arvai, CFP®, MBA
Life is unpredictable. While we can't foresee every twist and turn, we can prepare for what may lie ahead to help protect ourselves, our family, and our stuff. Insurance often serves as a crucial tool in this preparation, offering a safety net against unforeseen events. Before caring for loved ones, protecting your home, or building a legacy, you must take care of yourself because you are your most valuable asset.
Building wealth starts with taking care of your health. Medical costs remain the #1 cause of bankruptcy in the US, and rising medical expenses can feel overwhelming. Health insurance helps mitigate these costs, making healthcare more accessible and affordable. Even when health insurance does not seem worth the investment, it is hands down the most important one you will make over your lifetime. Being reactive with your health is often far more expensive, both financially and emotionally, than taking a proactive approach. Skipping annual check-ups, preventative screenings, or delaying addressing symptoms makes you susceptible to negative compounding effects on your overall financial well-being and future. The risk is clear—turning small, manageable health issues into major financial burdens. Without health coverage, the average cost of a three-day hospital stay in the US is over $30,000, not to mention the toll a hospital visit takes on other areas of your life. Health insurance isn't just about avoiding enormous costs; it's centered around making you the best and healthiest version of yourself. Building your financial plan around sustainable self-care is one of the most meaningful decisions you can make.
In essence, insurance is about risk management. It's a proactive approach to protect yourself and your loved ones from potential financial hardships. Disability insurance is often overlooked, yet it remains among the most critical insurance coverage, along with health and life insurance. Each is designed to ensure that you or your loved ones are provided for in the worst-case scenarios. Disability insurance provides financial support if you cannot work due to illness or injury, allowing you and your family to maintain your standard of living, despite challenging times. Regularly reviewing your insurance coverage, goals, and needs remains at the core of your financial strategy to ensure alignment.
Now that you and your loved ones are protected, we now turn our attention to your stuff and lifestyle. Stuff is everything from your home, car, vintage teacup collection, clothes, and personal belongings. When it comes to protecting your lifestyle and property, auto and homeowners' insurance/rental insurance are foundational—but the details matter. For our clients in Michigan and other no-fault states, please understand the importance of unlimited Personal Liability Protection (PIP) coverage. While recent legislation allows for lower coverage options, unlimited PIP remains the gold standard for safeguarding against catastrophic medical expenses following an accident—especially when considering lifelong care costs.
Whether you are a homeowner or renting, policy insurance requires intentional customization. Renters insurance is often overlooked, but it is an affordable way to protect your personal belongings and provide liability coverage if someone is injured in your rental—coverage your landlord's policy doesn't include. Standard policies often limit coverage on high-value items like fine art, wine, or other collectibles. To fully protect these, you'll need to itemize and schedule them separately, which may require formal appraisals and updated valuations every few years. Whether in Michigan or elsewhere, ensuring your policy reflects the full value of your lifestyle—not just your home or apartment's square footage—is a key part of holistic planning.
Umbrella insurance provides an extra layer of liability protection beyond your auto and homeowners/renters policies—offering you reassurance if you're ever involved in a major lawsuit. If you have significant assets, host guests frequently, or have young drivers in your household, consider implementing a policy. Property & Casualty insurance (auto, renters, umbrella, and homeowners) helps safeguard you, your family, and your stuff by ensuring your quality of life is not disrupted by unexpected damage or losses.
Lastly, let's discuss legacy and LTC coverage. According to the US Department of Health and Human Services, someone turning 65 today has nearly a 70% chance of needing some form of long-term care (LTC) services at the end of their life. Yet, it is very difficult and expensive to plan for. We often don't associate LTC with the legacy we hope to leave, but the two are deeply connected. Without a plan in place—whether through traditional LTC, a hybrid life/LTC policy, or a dedicated self-funding strategy—we leave ourselves vulnerable to preserving your financial legacy and easing the burden of your loved ones. Additionally, life insurance intended to cover legacy purposes offers comfort that your loved ones will be financially supported in the event of your passing. It can help cover funeral expenses and outstanding debts and provide ongoing income to your family.
The insurance hierarchy in your plan should reflect your values. Start by protecting yourself and your health, then protect your income and loved ones, your lifestyle and stuff, and finally, your legacy. Insurance isn't about fear—it's about caring deeply for the life you're building. Review your insurance coverage at least annually to identify if there are any gaps in your insurance coverage and assess where you are now. If there are gaps, strategize and implement coverage to ensure you are where you want to be.
Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Kelsey Arvai, MBA, CFP® and not necessarily those of Raymond James.
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc.
Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.