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Do You Need Insurance?

It’s a fact, many financial catastrophes could be avoided or at least lessened with proper insurance. Regardless of how you feel about the subject of insurance, you owe it to yourself and the security of your financial future to determine areas where you are vulnerable and the types of insurance coverage that might offer you some protection if something unexpected occurs.

Everyone’s needs will be different because the exact types of insurance you choose and the amounts will depend on a number of factors, including your answers to questions like: How would you make up for the loss of income if you were unable to work? Do others depend on you financially – a spouse, a child, an aging parent? How would you replace your property if you were the victim of a fire, a theft, or an accident? What would happen if you were in an automobile accident? How would you pay for the medical costs? And the list of questions goes on. The point is to look at all of your major areas of vulnerability – to walk through scenarios of events that could derail your journey toward financial independence and then decide which ones it make sense to minimize with the use of insurance.

Once you identify the areas you want to insure, decide on the types of insurance you want. If possible, choose insurance types that offer you some flexibility in case your needs change. For example, life insurance offers you more flexibility than mortgage life insurance because it can be used in many ways

while mortgage life insurance will be paid directly to the mortgage company in the event of your death. 

At a minimum, your protection plan should include the following basic types of insurance:

  • Health insurance
  • Auto insurance (if you own a car)
  • Disability insurance (if you are working and depend on your income)
  • Long-Term Care insurance (if you are retired and want to protect your assets in case of an illness)
  • Life insurance (if someone depends on you or your income or you would like to leave a legacy)
  • Homeowners or renters insurance to protect your personal property
  • Umbrella Policy (if you have teenagers who drive or other activities that put you at risk for law suits)

Once you decide on the types of coverage you want, remember there are many different levels of coverage available. But beware, the more coverage or options you choose, the more costly it will be so buy only what you need, and always ask about ways to lower your premiums. Two common ways to decrease your premium while maintaining the coverage you want is to increase your deductible or delay the start of benefits on a disability policy, for example. In both cases this means that you will need to have savings on hand to pay the deductible or your expenses until your insurance payments start. As you build your wealth, don’t forget to build your cash reserves for emergencies as well. Having the ability to pay a portion of the costs can save you a lot of money on your premiums.

Having proper insurance is a good way to protect your assets and your ability to remain financially independent at any age or stage of your life. ps!

In Memory of My Dad

I lost my dad in January. We did not always see eye to eye but I know he loved me and his passing has left a large hole in my heart.

 Checklist for Personal and Financial Matters

When you lose a loved one, it can be a daunting task to take care of all of the things that need to be done and still maintain your sanity. I am still trying to hold onto mine. Here is a checklist I used that helped me stay on track:

  • Compile important documents, including:
    • Will or living trust
    • Deeds
    • Titles
    • Licenses
    • Insurance policies
    • Financial records
    • Tax returns
    • Identification papers
    • Military certificates
    • My life was made a lot easier because I had all of this info compiled in advance.
  • Put a freeze on all credit reports so no new accounts can be opened.
  • Close accounts and notify financial institutions.
  • Notify public agencies, i.e., Social Security, VA, etc.
  • Notify third parties, creditors and bill collectors.
  • Contact the attorney and/or executor named in the will to handle probate court or estate matters.
  • Check all insurance policies for death-related benefits.
  • Request a refund of any policies paid in advance that will no longer be used such as auto insurance.
  • Transfer assets and property titles if you are a surviving spouse, partner or dependent.
  • Contact accountant or tax advisor about filing taxes, preparing a budget and valuing assets.
  • Locate an safe deposit box(es).
  • Open individual bank accounts if you are a surviving spouse or partner.
  • Contact insurance agents to change your policies and beneficiaries, if necessary.
  • Cancel individual credit cards; but don’t remove the name from joint accounts for six months.
  • Change all home utilities to your name if you shared a home or cancel service.
  • Update your will. ps!

 

 

 

Essential Planning: Documents to Prepare and Review

Estate planning is not just for the rich or older people. It’s for anyone who wants to make life easier for those they leave behind or those who must take care of them in the event that they are unable to care for themselves. In addition, proper planning can reduce or eliminate court and probate costs, taxes, and delays in processing your requests.

Here is a checklist of six common documents to prepare and items to review:

  • Prepare a will.  At a minimum, your will should include any special requests regarding your final arrangements, a list of your assets and who you want them to go to, and the names of the individuals you want to be the guardians of any minor children. Be sure to follow the rules mandated by your state so that your will can withstand any challenges.
  • Prepare a living will. This document tells your doctors exactly what kind of care you do and do not want to receive if you’re terminally ill and/or incapacitated.
  • Prepare a durable power of attorney for health care and your finances. This document names the person who will make medical and financial decisions for you in case you are unable to do so. 
  • Review the ownership of your assets. What type of assets do you have and how are they titled? There are three basic ways that you can own property: in your individual name, in joint names with others, and through contract rights. Whether or not a particular asset that you own at the time of your death will need to be probated will depend entirely upon how it is titled. So review your assets and determine if they are titled appropriately for your situation. If not, make changes now.
  • Review the beneficiaries on your retirement accounts and life insurance policies. Make sure that they list the people that you want them to go to. Unlike many other assets, these will go directly to the named beneficiaries at the time of your death so it is very important to keep these up to date.
  • Investigate whether a trust would be beneficial. Trusts are legal arrangements that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs without the cost, delay, and publicity of the probate court, which administers wills. Some trusts even allow for greater protection of your assets from creditors and lawsuits.

Finally, discuss your estate plans with your heirs to help prevent future disputes and confusion. Keep originals of your important papers and instructions in a secure location, like a safety deposit box or leave them with your attorney. And keep a copy in a location that is easily accessible, like a filing cabinet. Then let people you trust, know where to find these documents in case of an emergency. ps!

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