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"Holistic planning" is hot, and it's important.
Helping clients take a broad view of the risks they face is a great way to deepen your relationship with them, and to protect their ability to participate in all kinds of financial services activities.
If you focus on working with life insurance, health insurance, or annuities, you may think that some of these risks fall outside your area of expertise, but it doesn't hurt to remind clients about the big picture.
Based on thousands of conversations with my own clients, here are the top five threats to the typical client's financial life. (Other than weak retirement planning, which, obviously, is such a big, complicated topic that it needs to be discussed in a separate article.)
1. Illnesses or Injuries
While disability "will never happen to me," it will happen to someone. Over 25% of today's 20-year-olds will become disabled before they retire, according to the Social Security Administration. Despite common belief, injuries account for a small fraction of disabilities, whereas musculoskeletal disorders are the most common type of claim (i.e. back pain, arthritis, etc.) followed by cancer.
The average disability then lasts for over three years, according to the Council for Disability Awareness.
Combine these stats with the fact that (according to the Federal Reserve Board) fewer than half of Americans have enough liquidity to cover three months expenses and you have a real threat. The most efficient solution is a combination of group and individual disability insurance, ideally with a true-own occupation definition and portability.
2. Lawsuits
With over 80% of the world's attorneys residing in the United States (according to data from eLocal Lawyers), we live in a sue happy society. Most Americans would have trouble affording the legal fees on either side of a case, but without proper protection, the losing party will certainly realize financial despair.
