Financial planning should be the natural friend of good insurance coverage

I had a friend who said that the trick to sailing in all conditions around the world was to know that sometime your boat would sink. He felt that keeping that fact at the forefront of his mind kept him prepared.

Well, sooner or later, you will not be able to cover your risks with insurance. There are some edge-case exceptions, but this will probably be the case for most customers. Being realistic about it, and not trying to fruitlessly imagine that most people can keep their full suite of insurance to the end of their lives.

Although this sounds a bit backwards, that fact should actually make it easier for consumers to commit to sufficient and effective cover today. Sure, there is a bit of expenditure here – but it won’t be forever – your premiums will remain high only so long as you have the need for the cover.

What reduces the need for cover? For most people it is a combination of things, both a reduction in their liabilities and an increase in their personal wealth. The milestone events for most people in their financial lives that reduce insured needs are: