Back To Basics: Financial Planning For The Unthinkable

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• Tags: back to basics, death, family, insurance, Prosperity, will

Most of us do not want to think about dying.  Of course, it is going to happen to all of us whether we like it or not.  There is no way around it.  Dying is probably the one certain fact of life that we most like to ignore.   However, we have a responsibility to our spouses and family to be financially prepared for when it happens. 

You might say, “Jeff, I’m only twenty-something or thirty-something or forty-something, I don’t need to worry about this yet.”  Well, I was recently reminded that unexpected things happen. 

It is never too early to have your finances in order.  What if the unthinkable happens?  Do you want your spouse to lose the house to foreclosure?  On top of grieving over losing you, do you want your children to have to deal with probate court to get access to your assets?

The two most important things that you can do

I’m going to keep this pretty short and simple because I think that if you do just these two things that you have gone a long way toward taking care of your family should you pass.  This is a back to financial basics series and I think most people would agree that these two actions alone can save your spouse and children a lot of hassle, worry, and financial hardship.

1.  Get term life insurance today

Term life insurance is very simple.  If you die during the policy term, the insurance company will pay your beneficiary the amount of the policy.  Term life insurance is the only kind of life insurance that you need.  Do not let anyone sell you anything else.  It is very affordable and, unless you have a million dollars in the bank, you are being very irresponsible if you do not have it.  I cannot make it anymore plain.

I would suggest looking into buying a 20 or 30-year level term policy.  Level term life insurance guarantees you will pay the same annual premium for the specified number of years.  This way your premium doesn’t go up from year-to-year based on your age and other factors.

How much term life insurance do you need?  Well, many say that as a rule of thumb, you should have 5 to 10 times your annual salary.  There are also some calculators to help you compute how much term life insurance to buy.  The amount is a personal decision, but one that you should give some thought to.

Term life insurance lets you rest easy knowing that your family will be financially secure if you die.  It is really selfish not to do this especially if you are the main bread winner.

2.  Create a will

Do you want some judge in probate court to decide who gets your children and assets?  I didn’t think so.  However, it is estimated that 60% of Americans do not have a will.  I imagine this is again because people just don’t want to think about their demise.  They think it will never happen to them.  Of course, it isn’t if you are going to die, but when.  If you are wrong about the timing, then you are going to cause your family a lot of stress and anxiety by leaving without a will.

A will spells out exactly who you want to be the guardian of your minor children.  It also dictates how your assets should be distributed amongst your loved ones.  Finally, it appoints someone to be the executor of your estate.  The executor oversees the process of wrapping up your financial affairs as detailed in your will.

You can either create a will yourself or have a lawyer do it.  Unless your situation is complicated, you can probably do-it-yourself.  You can purchase software from Quicken called WillMaker for about $40 or you can buy the forms online at USLegalForms.com starting at about $20.  Obviously, the DIY alternative is very affordable so there is no excuse for not having a will.

Also, don’t forget to update your will from time-to-time especially if you experience big life changes like a change in marital status, moving to a new state, or a large change in assets.

Once your will is complete, store it in a safe place and let others know where it is so they can execute it for you when needed.

Take these two steps today to take care of your family

Having term life insurance and creating a will are two very important things that you can do to ease the burden your family would experience should you die unexpectedly.  Both of these things are affordable and easy to get done.  Why not take action right now to plan for the unthinkable?

What steps have you taken to prepare your family should you pass away?

Photo by Qole Pejorian