Insurance is a risk transfer mechanism. You pay a premium to shift the financial consequences of a low-probability, high-impact event from your family to an insurance company. That's it. The goal isn't to over-insure against every possible risk; it's to identify where a financial shock could derail your plan and ensure those exposures are covered.
As your net worth grows, so does your risk exposure. A standard auto or homeowner's policy often carries liability limits that fall short of what a serious lawsuit could cost. An umbrella policy layers additional liability coverage, typically $500K to $5M or more, on top of your existing policies at a relatively low cost. Although the cost of umbrella insurance has risen sharply over the past couple of years, I still strongly recommend it. For most families with meaningful assets, this is one of the highest-value risk management decisions they can make.
Home values have appreciated significantly over the past several years. If your homeowner's policy hasn't kept pace, you may be insured for far less than it would cost to rebuild. Dwelling coverage should reflect current replacement costs, not what you paid for the home or what it was worth when you last updated your policy. This is worth reviewing annually and especially after major renovations or significant market appreciation.
The purpose of life insurance is to replace what would be lost financially if you died prematurely: income, future savings, paying off debt, and the cost of services you currently provide your family. I use a customized needs analysis to determine how much coverage makes sense based on your specific situation: income, debts, dependents, existing assets, and long-term goals.
For service members expecting to receive the pension, I also recommend insuring the present value of your expected pension with term life insurance. This requires adding term life coverage to the $500,000 SGLI amount. This is a great, affordable way to cover your family in case you pass before reaching the 20-year mark and receiving the pension. I also almost always recommend that, for married couples in which one spouse will receive the military pension, they elect the Survivor Benefit Plan (SBP) so the spouse receives 55% of the veteran's pension if the veteran predeceases. Yes, it comes at a cost. Yes, I've seen situations where the vet dies prematurely, and the spouse receives nothing for all those years of service and loses their financial independence!!
The ultimate objective of life insurance is to have enough term life death benefit to protect your family until your net worth reaches a level where the portfolio itself provides that protection. At that point, you're self-insured, and the need for coverage decreases or disappears entirely.
I generally don't recommend whole life insurance or annuities. They are expensive, complex, and rarely the best solution, despite what that guy from your high school who claims to be an infinite banking specialist tells you! That said, there are specific situations where exploring them may be worth the conversation, and I'll tell you honestly when I think that's the case.
Real estate investors face a distinct set of risks that require deliberate planning. Every rental property should carry adequate liability coverage to protect against a serious claim from a tenant or visitor, as well as replacement-value coverage that reflects the cost to rebuild the property today, not its original purchase price.
Beyond insurance, structuring your real estate portfolio through LLCs is an important layer of asset protection. Holding properties inside properly structured LLCs helps separate your business liabilities from your personal assets and your personal liabilities from your investment properties. Without that separation, a lawsuit stemming from one property can potentially reach your personal finances, other properties, and the wealth you've built outside of real estate.
Setting up LLCs correctly requires working with a qualified attorney, typically an estate planning or asset protection attorney, who understands both your real estate holdings and your broader financial picture. I help clients think through when and how this structure makes sense as part of their overall plan, and coordinate with their legal team to make sure the financial and legal strategies are aligned.
An excellent book to read on this topic to help you be more informed when you go speak to an attorney is "Start Your Own Corporation" by Garrett Sutton, Esq.
A risk management review covers the full picture: life, disability, liability, property, rental properties, and long-term care, as they become relevant. The goal isn't to sell coverage; it's to make sure the risks that could genuinely damage your financial plan are addressed, and that you're not paying for coverage you don't need.