Tue 25 Sep 2007
Have you planned for Your Family’s Financial Security?
Posted by Robin Bal under Financial Planning , Insurance[6] Comments
No one likes to imagine that illness or death could compromise their family’s financial security. But, tragically and all too often, these things devastate families and leave them in a vulnerable financial position just when they need the most security.
Spending only a few hours preparing for such a scenario might save your family needless trouble. Once, only fathers needed to worry about this, but today with two-earner families comprising the majority of families, both partners should actively participate in planning to ensure financial security for themselves and their children.
At the very least, each partner should have a simple will specifying who will receive assets and who will take guardianship of the children. Financial professionals advise naming one person to control the financial assets and another person to take physical custody of the children. Although this is a good short-term solution, you should consult a lawyer as soon as possible, particularly if you have a lot of assets or there is disagreement in your extended family about who should serve as guardians for your children.
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Adequate life insurance is also essential to protecting your family. The majority of people do not carry enough life insurance to ensure that their family will enjoy the same quality of life after their death. Simple term insurance is adequate for most people’s needs. Whole life policies rarely provide the same level of returns as other investments, such as stocks.
Many insurance companies have life insurance calculators on their websites which will help you determine exactly how much insurance you need. Be sure to take into account any insurance provided by your employer. If one spouse stays home with the children, they should also be insured since the surviving partner will need to pay for child care and household services.
Most people are unaware that it is not death, but disability that most frequently causes financial problems for a family. Check with your employer to see if they offer short and long-term disability insurance. If not, have your insurance adviser quote you for this essential coverage that will protect you and your family if you can no longer work.
Finally, long-term care insurance will cover nursing home or other types of ongoing residential care. Young people often overlook this coverage, thinking that it’s only for older people. However, head injuries, paralysis and other traumatic injuries often result in the need for long-term residential care.
September 26th, 2007 at 12:04 am
Good to hear you have all that covered mate.
Take care and cheers.
September 26th, 2007 at 6:55 am
My mum doesn’t have life insurance. She only has accident coverage for the elderly. Recently, she had a spinal surgery which is not covered by her policy. Just imagine the hefty bill for 2.5 months that I’ve to pay. 🙁
It’s best to get insurance coverage as early as possible.
September 26th, 2007 at 10:57 pm
Hi Viv,
Sorry to hear that. ”Insurance is like a parachute, if you don’t have it when you need it. it’s too late”.
Take care and cheers
September 27th, 2007 at 5:06 am
Hi Anna,,
A lot of us tend to get lax in such important matters, but its never too late. Good idea to leave something for the kids, essential part of Estate Planning.
Things are going fine here. Take care and cheers.
September 27th, 2007 at 6:09 pm
Hey Robin,
Karen and I restructured our entire investment and insurance portfolio some time ago. We cut back on endowments and focused on term for maximum coverage with minimum sums.
Reinvested our monies into funds managed by an independent adviser. The result is nothing short of amazing for us.
In the past, we get crappy returns and huge premiums for a low insurance coverage. Now, we get max coverage with minimum premium and returns in excess of 10%. 🙂
But I agree that disability is the killer and I need to look into that asap. Thanks for reminding 🙂
Cheers
James
September 27th, 2007 at 10:03 pm
Hi James,
Endowment plans are gradually being phased out mate, with Term Insurance you can get a higher protection for a low premium. I am glad to hear that you are getting a double digit return on your investments, which is pretty good.
A lot of term insurance plans have the option to attach a disability rider, you can check on that.
Take care and cheers.