Thank you

Every day we get to apply things we care about to the lives of people who are generous to us with their trust and attention.  That feels like a pretty good symbiotic relationship, if you ask us.

We are attracted to the puzzle-solving and creative process of designing and engineering plans that protect wealth.  We are attracted to the friendships formed when getting to know a family and their history.  We are attracted to the competitiveness behind elevating what consumers can expect and learn about this industry that otherwise does so poorly on so many fronts.  And we are attracted to unburdening the hassles so that our clients can focus on better things.

We are grateful for the times we are asked “what do you think”?  We are grateful for the times our clients tell their friends about us.  We are grateful for the times our clients say, “I never knew that, but now I understand”.  We are grateful for the times our clients say they appreciate not having to worry about another detail in their life.

We exist to care for the people who care for us, and we are so grateful to have so many opportunities.

Photo:  Flathead Lake, MT

If oranges = insurance policies

If buying an orange was like working with insurance companies, here’s what it would look like:

Joe’s Market advertises The Cheapest Oranges in town.

You go to Joe’s to buy oranges.

Joe asks you some questions, like:

  • why do you want these oranges?
  • how long have you bought oranges from Frank’s before coming to Joe’s?
  • how do you plan to peel the oranges?
  • how clean is your kitchen?
  • will anyone juggle with the oranges?
  • will the oranges be refrigerated, or left in a bowl on the counter?
  • can you give me a sample of earlier orange juice you made?

After you answer, Joe takes one week to think about it, then gets back to you with his offer:

  • you can buy 2 oranges but you can only buy the smaller ones
  • I’ll let you buy the oranges if you promise your son won’t eat one
  • the oranges will be sweet, but only if used for the following recipes
  • the oranges cost $1, but I won’t tell you why and tomorrow they may be $2
  • there’s a chance that after you buy the orange I’ll change the price and send you a bill
  • forgot to tell you earlier, but if you also want to buy an apple here, I won’t let you
  • I’ll mail you a 50-page receipt and 4 pieces of mail over the next 2 weeks
  • Go online to pay, and good luck deciphering the payment options
  • Please don’t call us ever again

I know how insurance companies stay afloat, and I support their efforts to underwrite in order to provide anyone with any financial protection at all.  I get it.  But what I do NOT understand is that they’ve yet to reduce the cumbersome, often not intuitive, frequently not transparent, and seemingly arrogant manner in which they create roadblocks to a more favorable experience in an area that is so important to families.

We believe it’s our calling to sit between insurance companies and families because insurance companies don’t teach, they don’t advocate, they don’t make things smooth, they don’t show appreciation, they don’t come talk to you at your house about what matters to you, they often don’t call you back, they follow rules and manuals, and they act like they’re in it for themselves.  They are not stewards.

Photo: Siena, Italy

Insurance design how-to

At the end of your financial planning process, you’ll probably discuss with your wealth advisor the threats to accomplishing what you’re planning for.  This is usually where you talk to an insurance agent and they sell you an insurance portfolio, after which you might never re-address your insurance again for a long time.

To help with the likelihood that your “one chance” to get your insurance done right is actually done right, I’ll offer you this template of a process for introducing your needs to an insurance agent, and then using it to audit what they’ve done to see if it fits what you need.

Step 1: Realize that insurance is just a financing tool.  It does not reduce risk, nor does it transfer risk.  It just pays for losses in ways and in amounts governed by the insurance contract negotiated between you and the insurance company.  You’re buying an agreement, not a panacea. Understanding this will help you with your decisions and expectations.

Step 2: Address who needs their risks financed. Obviously, you do.  But also be sure that a marital community, or domestic partnership gets their fair share of the rights.  We’ve seen 1/2 of a relationship quite surprised by the realization that they don’t actually have the same rights under the policy because the agent did it wrong.  Also, if there are any stand-in entities like Trusts, LLCs, Family Partnerships, be very clear about whether they have rights under the insurance – nothing is worse than moving assets into a Trust for protection, only to find out later that doing so left the Trust totally without the same insurance you had.  Be sure to include consideration for minor children, children not-yet independent but are close to being so, ageing parents for whom you may provide care or support.

Step 3:  Inventory the assets and financial horsepower that your financial plan is depending on.  Real estate, tangible assets, valuable collections, personal property, vacation and rental homes, vacant land, time shares, home-based businesses, ability to earn an income in a particular profession, health and well-being, cash/investments, business income and equity value, business perpetuation, key-employees or partners, access to borrowed funds, social goodwill (especially for professional services), identity/personal security.

4. Assess, even briefly, your perceived exposure to different risks.  You and I may not share exposure to the same types of losses, so for a starter-list of risks, check out an earlier blog post here.

5. Assess, even briefly, a range of financial consequences you might face if you did suffer a loss.  It doesn’t have to be exact, but if you had to rebuild your home, for example, could you do it for the amount you currently have it insured for?  No one can predict a serious accident, and no one can predict how much a jury could decide in favor of a plaintiff, but I think it’s smart to have an idea in your head about what you feel is a reasonable amount of net worth protection to have against liability.  If you’ve worked hard to have a net worth of X, how much of that do you want insured against insurable allegations of liability?  That’s a personal decision and having some idea will put you in the driver’s seat of deciding on liability limits instead of asking an insurance agent what they think – you know you better than they know you.

We don’t believe that consumers need to know how to design and execute their insurance portfolio, but they should know the standards and boundaries of what a good insurance plan should do for them.  Bringing your own intelligence to the five points above will help interview, hire, and audit whomever you choose to handle the insurance that is meant to help protect the capital you expect will perform for your financial plan.

Photo: Rachael McGraw – Manhattan Beach, CA