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How to Add the Insurance Goal Insurance Recommendations

Overview

The Insurance Goal within Orion Planning allows you to calculate coverage gaps and build recommendations for Life, Disability, and Long-term Care insurance for your clients through the What-Ifs functionality. This article provides instructions on how to add the Insurance goal to a plan, the inputs that you need to enter in the client's profile, how to leverage What-Ifs. It also explains the calculations behind the recommendations.

How to Add the Insurance Goal

Add the Goal

• Navigate to the Profile Page  and click on Goals Input. Then, click on the Insurance goal tile. 
   

 

• Unlike other goals, the insurance goal does not require any inputs. You will receive a message that asks you to enter any existing Insurance policies to the plan. Then, click Add Goal.

 

 

Enter Existing Insurance Policies

• After the insurance goal has been added to the plan, within the client's profile, click the Insurance section. 
• Enter the client's current Life, Disability, LTC, and Health Care insurance policies.
• The system will calculate a recommendation based on the plan inputs, and reduce the recommendation by any existing insurance the client already owns. In order to make accurate recommendations, it is critical to provide these inputs. 

Example of the insurance section after it's been completed: 

 

Insurance Recommendations

• The insurance recommendations encompass the current/proposed projected needs for both spouses (if applicable) for Life, Disability, and Long-Term Care. 

 

Navigate to the Recommendations Once all of the client's existing policies have been entered, the next step is to build your recommendations.  Click on the  from navigation bar to the left side of the screen.  From the Goal Summary Page, click on the Insurance tile.

Select the Type of Insurance

• Next, select the type of insurance you would like to analyze and create recommendations for. 
• Select the insurance type from the menu bar at the top of the graph: Life, Disability, or Long-Term Care.
• The Assumptions option is present in every goal and provides the underlying assumptions that are used to create the calculations in the goal.

Switching Between Spouses

• It is important to verify which spouse you are viewing throughout the Insurance Goal Recommendations.
• In any of the insurance sections, Life, Disability, or LTC, quickly confirm which spouse you are reviewing by checking the name that is displayed in the top left of the Proposal Graph.

 

Life Insurance

• The first tab in the Insurance Recommendations is Life Insurance

• The recommendations for Life Insurance can be based on the Needs Analysis or Income Replacement methods.
   

Needs Analysis
 

• The Needs Analysis factors in the surviving partner's income, assets, goals, expenses, and liabilities to determine if they have enough insurance to cover their future expenses, goals, and liabilities. If they do not have enough coverage, review the additional insurance amounts that they would need to receive today in order to cover those factors.

• Please Note: The present value calculation is using the rate of inflation in the plan. 

Coverage Gap: The difference between a client's Current Coverage vs the Recommended Coverage. Assets Run Out: The age at which the surviving spouse will run out of assets with the current amount of insurance. Current Coverage: The total amount of coverage the client has today, entered in the Profile > Insurance section. Recommended Coverage: The amount of coverage that the client needs based on the Needs Analysis. Final Expenses: The $10,000 in the recommendation is a system default, and represents final expenses when a person passes away. Uncovered Future Expenses: The present value of all future uncovered expenses of the surviving spouse.  Uncovered Liabilities: Represents the total of all outstanding liabilities today, and how much the surviving spouse would need to pay them off.

 

Income Replacement
 

• The Income Replacement method will base their life insurance need on the present value of all future employment income. It does not consider business, real estate, or other income.

Please Note: The present value calculation is using the rate of inflation in the plan. 
 

Coverage Gap: The difference between a client's Current Coverage vs the Recommended Coverage. Assets Run Out: The age at which the surviving spouse will run out of assets with the current amount of insurance. Current Coverage: The total amount of coverage the client has today, entered in the Profile > Insurance section. Recommended Coverage: The amount of coverage the client needs based on their Income. Client's Employment Income: The present value of all future employment income.

 

What-Ifs for Life Insurance

The life insurance module also allows you to create What-If scenarios to better customize the recommendations for your clients. This includes adjusting the surviving spouse's living expenses, income,  and if they were to purchase additional insurance. 
 

• Adjust Expenses: The adjust expenses What-If relates to the Needs Analysis calculation. You have the ability to increase or decrease the surviving spouse's income after death. It is important to ensure you are viewing the correct spouse's insurance need as you make changes to this. For example, if you are adjusting the surviving spouse's living expenses if James were to pass away, you would adjust the percentage amount under James. 

 

• Adjust Income: Similar to the adjust expenses What-If, you can also illustrate the surviving family's income changing after the death of a spouse. 

 

• Purchase Additional Insurance: Illustrate the impact that purchasing additional life insurance has on the recommended amount and additional factors like when Assets Run Out. 

• Please Note: Only the What-Ifs for the surviving family's income and expenses will impact the Proposed Plan. The additional insurance What-Ifs will not change the Proposed Plan. 

 

Disability Insurance

• Disability insurance is also included in the insurance goal and provides a comparison between the client's current disability coverage vs the proposed disability coverage.
• The disability insurance recommendation is calculated based on 60% of the client's current employment income. This is set by default, and cannot be changed. 
• There are currently no What-If capabilities in the disability module. 
• Monthly Salary: The monthly salary is the client's employment income under Profile and Income.
• Coverage Limit: The maximum income replacement from disability insurance. This number by default is 60%
• Coverage Need: The gap between current coverage and the coverage limit. 
• The graph will illustrate the current coverage in dark blue, with the coverage gap in light blue. The coverage gap is the coverage limit (60% of monthly income) - current coverage. 

 

 

 

Long-term Care Insurance

• The last insurance module is Long-Term Care insurance. The LTC module allows you to illustrate the importance of LTC insurance, and the impact it has on their assets. 
• Assets to Liquidate: The value displayed here is the total value of Retirement Assets at the age of the LTC event. This is NOT the current market value of accounts, but rather the projected value of assets when the LTC happens.
• Annual LTC Cost: This is the cost incurred to the client during an LTC event. The system default is $100,000. You are able to adjust this number in the What-Ifs.
• Daily Benefit: The daily benefit is the total of current coverage, and any proposed additional coverage applied in the What-Ifs for the LTC module.
• Annual Insurance Cost: The annual insurance cost is the premium amount input in the Profile, under Insurance for any LTC coverage.

 

What-Ifs for Long-Term Care

• The LTC module does have What-If capabilities including the ability to adjust the time frame and the age at which the LTC event occurs and for how many years. 

 

• You can also adjust the cost of LTC per year. The system defaults to $100,000 per year. 

 

• Under the Additional What-Ifs section, you are also able to see what happens if your clients purchase additional LTC insurance. The input for this What-If is a daily benefit. For example, James purchases an LTC policy that provides an additional $300/day of coverage.