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Insurance as Part of Your Investment Plan

How can insurance play a significant role in helping preserve and achieve your financial goals?

Now is the time

Insurance can be an uncomfortable topic, steeped in life’s unknowns. But now, as we face the uncertainties of the coronavirus outbreak, it’s more relevant than ever. Insurance can play an integral role in your overall financial strategy.

Helping you along your path

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When planned wisely, insurance can help cover the expected and unexpected events on life’s journey.

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Right now, your path to retirement may look clear, with appropriate allocations to handle living expenses, pursue your dreams, and deal with life’s detours. But what happens if your path is cut short by an untimely accident or illness? Or wiped out by a death and the accompanying loss of an income stream? That’s where insurance can come in. When planned wisely, insurance may help cover the expected and unexpected events on life’s journey – and help you stay on course financially.

Life insurance

Putting off life insurance decisions is more than just a coverage risk. It could also cost you considerably more in the long run. Almost without exception, insurance may be more affordable when you’re younger and healthier. As you age, premiums may rise steeply and coverage may be harder to obtain.

Life insurance comes in two forms: term and permanent. The first, as its name implies, provides coverage for a limited period of time, usually 10, 20, 30 years. Permanent life insurance, on the other hand, provides coverage throughout your lifetime as long as premiums are paid. With permanent policies, you may be able to build equity, or “cash value,” over time.

Depending on the type of policy, the cash value can potentially grow, tax-deferred, and may generally be accessed through tax-free withdrawals and/or loans.

Permanent life insurance offers other potential financial options and benefits:

  • Funding source for major life purchases or expenses such as a home purchase or small business build-out
  • Flexible retirement spending
  • Loan collateral
  • College savings – especially since it’s typically not considered an asset in federal college financial aid calculations and could potentially help you qualify for more aid
  • Long-term care premiums (through a tax-free 1035 exchange)
  • Income tax-free legacy funds

Disability insurance

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More than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age1.

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Most people don’t see disability in their future, but, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition (anything from a back injury to depression) before they reach the normal retirement age,1 according to the Council for Disability Awareness. And, the average individual disability claim lasts 34.6 months.2

Because of this, a disabling condition during your working years can seriously impede your income stream – even dry it up.

If you’re covered under a group disability policy, you’re typically eligible for up to 60% of your salary, but payouts may not start immediately. To make up for losses during a group policy waiting period as well as the remainder of your income once payouts begin, you’d need coverage under a supplemental disability insurance policy.

Keep in mind, group policies are often hampered by qualifiers. For example, “own occupation” policies pay if you’re unable to perform your current job duties. “Any occupation” policies, on the other hand, only pay out if you can’t work in any job deemed reasonably suitable for you.

If you don’t have the financial means to live comfortably without income until you retire, you may want to consider disability policies that last until at least age 62.

Long-term care insurance

As life expectancies continue to climb, the probability you or your spouse will require home health care or nursing-home care rises as well.

The costs for receiving this type of care can be substantial – and are not covered by Medicare. In fact, the national median cost of a nursing home stay is $90,15533 annually for a semi-private room.

For some, long-term care coverage may be the best way to help protect against potentially devastating costs of extended care later in life. Like some other types of insurance, purchasing early may lead to savings down the road.

A critical planning component

Next time you review your retirement plan, don’t forget to consider your insurance needs. Life, disability, and long-term care insurance can help you stay on track toward your financial goals through retirement and beyond.

Next steps

  • Determine your insurance needs.
  • Ask a financial professional for help finding the right insurance coverage for your needs.

1 Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 1997, Table A.


3 Based on 365 days of care, Genworth Cost of Care Survey 2019, conducted by CareScout®, June 2019,

Insurance products are offered through non-bank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

Wells Fargo Advisors is not a legal or tax advisor.