When we have big events in our lives, such as deciding to marry or making a legal commitment to a significant other, adopting a child or buying a home with an extra bedroom for an elder family member, we often think about insurance. But what if we didn’t wait for a milestone to plan for the future?
Insurance can feel daunting for many of us — particularly if you’re a lesbian, gay, bisexual, transgender, questioning, and/or queer (LGBTQ+) individual who has concerns about fully being understood by insurance providers. Or you are single and don’t think you need it. You might be wondering how to find a provider who has experience working with LGBTQ+ people and what types of insurance you need.
Your first step is to find a partner who can help you navigate insurance options and determine the best path for you. Work with a CERTIFIED FINANCIAL PLANNER™ professional who can relate to your personal situation and with whom you can build trust.
You can use the “Find a CFP® Professional” tool to locate a professional with an LGBTQ+ client focus and be confident that you will find a CFP® professional who has experience working with people like you and working with other financial professionals, including insurance providers. Your CFP® professional does not have to be in your community or local area. Many LGBTQ+ professionals have information on their websites and social media to help you find us.
Make sure to interview several CFP® professionals to ensure that you find one who is a great fit for you. Prepare to have an open discussion with them and share your own personal story and your journey. Strong, trusted relationships are crucial to finding the right insurance policy and provider. If you are not fully comfortable, keep searching.
Explore foundational insurance
While insurance choices will depend on your specific situation, start by exploring foundational insurance options with your CFP® professional to protect you and your loved ones’ financial futures. We consider foundational insurance to be health, life, long-term care and disability insurance. These types of policies will help you keep your financial plan more solid if you have something happen that is not in the plan!
Insurance policies are a personal decision — not all types of insurance or policies are suitable for everyone. Many factors go into selecting the right policy for you — your age, budget, beliefs, lifestyle and health conditions are just a few things that need to be considered. And all these types of foundational insurance policies have many options to choose from when selecting which one is right for you and your loved ones.
Understand your budget and clarify your feelings and opinions about what types of insurance you need to protect your financial foundation. Make a decision tree and consider how you will pay for the insurance now and in the future. Insurance is situational, and often as people get older there are different types of insurance and policies that make good financial sense to have:
If you are employed and have access to major medical insurance policies, this is often your best option. Hopefully, you have an informed HR department to help with all the choices. Consider how much you go to the doctor’s office and where you spend money in healthcare.
Health insurance plans with high deductibles can be a suitable solution for self-employed people since you are able to incorporate a health savings account (HSA) with it. HSA contributions, at the time of this writing, are eligible for a tax deduction, which makes an HSA even more attractive. You can also use your HSA funds to pay for those charges that are considered health insurance deductible amounts as well as other medical items that are not covered under your health insurance plan, such as vision and dental costs.
Life insurance is an important part of a financial plan, as this protects the people you care about when you are no longer here. Term life and permanent life insurance are two primary insurance policy options, though there are other options as well.
Term life covers you for fixed periods such as 10 years, 20 years or 30 years, and permanent covers you for the duration of your life. Both term and permanent life insurance policies have a place in financial planning, and the choice is dependent on individual goals and needs. Term life insurance is more cost-effective typically, but permanent insurance has more flexibility in financial planning.
For example, many permanent life insurance policies offer the option to access the cash value of your plan not only without penalty, but also on a tax-free basis. This option might be useful for emergencies and for retirement income planning in some cases.
Riders or options can be added to base policies for additional planning solutions. For instance, long-term care riders for proactive care planning are often attached to a permanent life insurance policy or annuity policy as part of an overall strategy in a comprehensive financial plan.
Unless you have had a personal experience with a family member or close friend who required long-term care, long–term care insurance (LTCI) is probably not on your radar. This insurance is not just for the elderly. Statistics show that younger individuals need long-term care, too. LTCI kicks in if you are not able to perform two out of the six daily living activities: bathing, eating, transferring, dressing, toileting and continence or if you are diagnosed with cognitive issues.
Often, financial plans show that people need long-term care insurance whether or not they are in a relationship or single or have or don’t have children. This is because it is a risk management tool used to protect retirement savings should circumstances arise. For unmarried LGBTQ+ partners, the good news is that many insurance carriers recognize domestic partner status and will offer a preferred rate if you live with your life partner. You do not have to be legally married to receive the discount.
It is a good idea to work with a qualified CFP® professional when formulating a blueprint for long-term care, as there are complexities that need to be considered. For example, benefits can be paid out on a reimbursement basis or received as a cash payment (called an indemnity plan). These details are important to take into consideration when strategizing, and a CFP® professional will help you decide what is best for you.
Disability insurance can be difficult to consider, as it can be hard to imagine situations when this type of insurance is needed. We cannot stress enough that planning for the unexpected, i.e., if you suddenly become no longer able to work, is critical to protect your and your loved ones’ financial futures. Long-term disability (which typically lasts until age 65) and short-term disability (which typically lasts several months) are the two primary types.
Many employers offer plans that are cost-effective solutions, and you can have the cost payroll deducted if the employer doesn’t pay the premium for you as a benefit. If you are self-employed, it’s wise to review the different options — for example, whether to buy an individual disability policy or create a group policy for your business. The premiums and coverages will be different, so your budget may be the deciding factor in this choice.
Make sure you are working with someone who can help you fully understand your options. Don’t just buy the least expensive policy if it doesn’t cover what you might need. But make sure the cost is in your budget, so you don’t cut it out if cash flow gets tight.
Insurance planning can become complicated quickly, and of course, there are more types of insurance available. Before you incorporate insurance options in your financial plan, you’ll need to do some research. A CFP® professional can help you navigate all of the options available to you so you can properly insure yourself at your comfort level.
Laura LaTourette offers Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through WCG Wealth Advisors, a registered investment advisor. WCG Wealth Advisors and Family Wealth Management Group are separate entities from LPL Financial.
Grace Yung offers Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.