Most financial advisors work on commission. When investment sales are down, advisors often turn to talking about insurance – the in-house sales and marketing material often talk about various strategies involving life insurance, critical illness insurance, disability insurance and long term care insurance. Insurance policies pay surprisingly large commissions. For example, a simple term insurance policy costing you $20/month can generate hundreds of dollars of up front commissions.
Whether you need the various types of insurance (and how much) is up to you and your advisor to decide, but don’t forget to get a detailed quote which outlines what is known as a “needs analysis”. A needs analysis will calculate your funding shortfall in the event of death (or disability, critical illness, etc.) based on your input and estimated expenses. It doesn’t hurt to review your needs analysis over time as well – you may find that you are under-insured… or over-insured.