annual financial review checklist

Financial health is never static. Because needs and situations change, an annual financial review is a critical tool that helps individuals keep on track with their financial goals. Unfortunately, some reviews leave out the most important component: income protection. Include disability insurance in your annual financial review checklist to make sure you’re not leaving your clients exposed to the risk of income disruption.

Income Is the Foundation for Financial Health

Financial planners help clients with investment strategies and savings goals, but many financial planners neglect income protection. This is a huge oversight because financial health often depends on a steady income.

Think about what would happen if a client suddenly had to stop working due to an injury or illness. Between the lost income and the mounting hospital bills, they would probably run through their emergency savings fast. Then they’d have to start tapping other funds, such as their retirement savings. They might have to liquidate investments just to make ends meet – and what happens once that money is gone?

This isn’t a farfetched scenario. The Social Security Administration says that approximately one in four of today’s 20-year-olds will experience a disability before reaching age 67. For comparison, only about one in eight will die before reaching age 67. Working-aged individuals are more much likely to experience disability than death. If workers are protecting their loved ones by purchasing life insurance, they should also protect themselves and their loved ones by purchasing disability insurance.

Don’t make the mistake of neglecting income protection. Make disability insurance part of your annual financial planning review.

Your Financial Planning Checklist

Tax Planning

  • What are the current tax strategies, and do these need to be revised in light of changes in income, wealth or tax law? Consider annual federal and state taxes as well as estate taxes.
  • Would disability insurance benefits be subject to taxes? Consider the possible tax consequences if your client had to go on disability benefits. Beneficiaries usually have to pay taxes on group disability insurance benefits, but individual disability insurance premiums are usually paid with post-tax dollars, and the benefits are therefore not taxed.

Retirement Planning

  • What investment accounts does the client have, and what is the current value of each account?
  • Do the beneficiary designations need to be updated?
  • How are investments performing, and is time to adjust the investment strategy in light of market conditions and the client’s appetite for risk?
  • How would a disability impact the client’s retirement planning? If the client could no longer work due to a disability, would they fall behind on their retirement savings? If this is a possibility, disability insurance retirement protection provides a solution.

Asset Management

  • What real estate does the client own?
  • What investment and savings accounts does the client own?
  • What digital assets, such as NFTs and cryptocurrency, does the client own?
  • What other property, such as fine art and jewelry, does the client own?
  • Are these assets being managed appropriately? Consider estate planning issues, beneficiary designations and insurance coverage.
  • What is the client’s income? A person’s income is often their most valuable asset. Include it in your asset management strategies and protect it with disability insurance. If an IDI policy is already in place, ensure that limits are high enough and that the client is taking advantage of the Future Purchase Option.

Financial Goals

  • How much does the client have in savings? Consider different types of savings, including emergency savings, retirement plans and college funds.
  • How much does the client have in debt? Consider different types of debt, such as student loans, mortgages, car loans, personal loans and credit card debt.
  • What are the client’s various financial goals? For example, does the client want to pay off debt, improve their credit score, save for college tuition or buy a house?
  • What is the client’s monthly budget? Is the budget sufficient to help them reach their financial goals, and are they succeeding in staying on budget?
  • How would a disability impact their financial goals? Disability insurance replaces a portion of the individual’s income if they can’t work due to a covered disability. However, group long-term disability insurance often only replaces around 60% of pre-disability income, and monthly caps mean that high-earners may receive even less than 60% of their regular income. If these replacement levels aren’t sufficient to keep up with financial goals, consider supplementing group coverage with individual disability insurance.

Insurance Coverage

  • Does the client have life insurance? If any policies are set to expire soon, consider the available options. Also consider whether additional coverage is needed.
  • Does the client need supplemental health insurance? Health insurance can leave gaps. Individuals may want dental and vision coverage as well as critical illness insurance.
  • Does the client have disability insurance? If the client already has coverage, determine whether the benefits are sufficient. An individual disability insurance policy can supplement group benefits.

Build An Ecosystem of Expertise

Is a lack of DI expertise keeping you from adding disability insurance to your annual financial review checklist? As a financial planning professional, you may recognize that your clients need disability income protection, but you may not know enough about disability insurance to help your clients secure the coverage they need. Use our exclusive DI Needs Analysis to gather the information you need for a DI quote.

Fortunately, you don’t need to be a DI expert if you have a DI partner in your ecosystem. DIS is the expert partner you need to build your disability practice.

Ready to get started? Ask us about our free co-selling option. If you’re with a larger agency or firm, talk to us about becoming an affiliate partner.


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