Protection Planning – What IF?
What if something should happen to you, a family member, or one
of your costly possessions? Are they protected?
Just like your computer should have protection against * viruses
*, your assets, family, and self also need to be protected.
First, let’s look at some assets that might need protection:
~~ HOME If you are buying a home, you are usually required to
have homeowners insurance, and depending on what area of the
country you live in, you might need additional insurance
protection, such as for natural disasters: hurricanes,
tornadoes, earthquakes, flooding, and just regular old storms!
If you are renting a home, apartment, townhouse, or condo, it is
also a good idea to look into renters insurance to protect your
belongings.
~~ AUTO If you have an auto, you are probably required by law,
depending on where you live, to have auto insurance. If the car
is still being paid for (you have a loan against the car) you
have to have full coverage, which is more costly.
~~ EQUIPMENT If you’re a business owner, you’ll need to protect
all your company assets, and if you rely on your computer to
make a living, get some protection for it ASAP!
You can get protection * in case of death * that will pay off
your home, auto, and some other bills.
You can get protection * in case of disability * that will help
you pay your bills while disabled.
Today, make a list of all the assets in your life that are
protected, and review the coverage you already have to make sure
it meets your needs.
Make a list of all the assets in your life that AREN’T
protected, and find out what kind of protection is available,
the cost, and if there is a real need to protect them.
And don’t forget if you use your hands, such as a pianist, or
your voice; such as a singer to make a living, these too are
assets that need to be protected!
Second, let’s take a look at some of the protection you and your
family might need, such as life insurance.
NOTE: I’m going to skip over Health Insurance because I wrote
about that in the March issue (see Puzzled by Your Insurance
Coverage? Let’s OverHall the Pieces! At
http://www.overhall.com/mar00.htm ). If you’re new to OverHall
IT! or have forgotten about this, I urge you to read and review
this article.
Life Insurance can provide you and your family with financial
security as protection or as an investment.
The purpose of life insurance is to fill the gap between Social
Security, Investment Income, and any other sources of income
your family might receive, and THEIR needs after you leave this
World.
So, how much insurance will you need to replace your income, and
to take care of your families needs?
If you’ve been doing the OverHall IT! exercises for the past six
months, you’ve got a head start on evaluating these needs.
According to life-line.org, “While there’s no substitute for
evaluating needs, one rule of thumb is to buy life insurance
equivalent to five to seven times your annual gross income.”
Life-line.org has a needs calculator that can help you with your
evaluation, but basically you need to gather up your financial
information and sit down and play the * what if * game.
NOTE: I realize that this subject matter might be too hard for
many of you to think about, talk about, or even plan for, BUT it
is a VITAL part of OverHalling and bringing Balance to the
financial area of your life. True, many of us think * that will
never happen to me *, or think you’ll stay healthy and young
forever; sadly, this is not the case for ANY of us. Everyone
must leave this World at some time, we just hope it’s later then
sooner. With that said, let’s continue.
First look at what kind of anticipated illness expenses and
funeral expenses your loved ones will need to make IMMEDIATELY.
What is the cost today? Ten years from now? At the age of 75 or
85? Total that.
Remember, you are playing the * what if * game and you need to
cover all bases, so to speak.
Next, add to that your total monthly family budget; this should
be slightly less now that you are gone. Do this as above: budget
today, ten years, different ages, different scenarios.
Next write down any income your family might receive from any of
the following:
~~ Your assets (savings, stocks, real estate investments, etc)
~~ Social Security Benefits ~~ Survivors Benefits from your
pension plan ~~ Your spouse’s salary and/or pension ~~ Other
sources
Total these items and you have total income available without
life insurance.
Now you need to subtract the total income your family receives
from income required (your monthly budget expenses).
Write down the number of years income is required (spouse’s life
expectancy).
Next multiply your required income by 12 and by the number of
years for your spouse’s life expectancy.
Subtract the amount of insurance you already have. Add in the
last illness and funeral expenses.
Your total will be an approximate of how much life insurance
should be maintained.
Please remember, as your lifestyle changes, your insurance needs
might change.
This is a lot of work, I know, but isn’t your family worth it?
Now what if you don’t have a family, children, or anyone that
relies on your income? Then you probably don’t need life
insurance, unless you want to be a nice relative or friend and
leave some money to others in your life .
Do you need to buy life insurance for your children? I say no,
unless your child is a movie star or bringing in income that the
family relies on. However, you can get life insurance for
children that you would use as an investment for future
expenses, such as a college.
Do your homework first, and then you’re ready to go and have a
serious talk with your insurance representative.
All this insurance, protection, and coverage can become very
costly, being prepared and KNOWING what you WANT and NEED will
aid you in making the correct decisions.
Remember, this is YOUR life, and your families, please take care
of both, now, before a * what if * really happens to you.
TIP: Don’t forget to look at the need you might have for Long
Term Insurance.
NOTE: Sometimes, and some people look at Asset Protection
Planning as a way to avoid future lawsuits, financial privacy,
reduce liability insurance costs, and a way to save on income
and estate taxes. To find out more about asset protection
strategies, go to http://www.rpifs.com/lawsuits/apbeneft.htm
Next month Part 4-the E in RIPE!
Smiles, not Piles, The Organizing Wizard, Janet L. Hall, is a
Professional Organizer, Speaker, and Author of 'Secrets of a
Professional Organizer and How-To Become One.' She is the owner
of OverHall Consulting and Organizing By Phone. Subscribe to her
FREE organizing newsletter at
http://www.overhall.com/newsletter.htm or visit her web site at
http://www.overhall.com
Copyright Ó 2000 by OverHall Consulting P.O. Box 263, Port
Republic, MD 20676 All Rights Reserved. Permission is granted to
reproduce, copy, or distribute so long as article is kept
intact, this copyright notice and full information about
contacting the author is attached.
About the author:
Smiles, not Piles, The Organizing Wizard, Janet L. Hall, is a
Professional Organizer, Speaker, and Author of 'Secrets of a
Professional Organizer and How-To Become One.' She is the owner
of OverHall Consulting and Organizing By Phone. Subscribe to her
FREE organizing newsletter at
http://www.overhall.com/newsletter.htm or visit her web site at
http://www.overhall.com
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