Do you have the needed documents for when you are not around or able to make decisions? Do you know what these documents even are? While there may not be a need for everyone to have all of these this is a good starting point. It is estimated that only about 44% of the people who need life insurance have it. A little better is 54% of people have wills, but about 20% of those are outdated due to life events. People have a natural adverse reaction to creating these documents as they tend to be on the morbid side of life. Again, what is needed by someone who is married and in their 40’s may not be what is needed by a single twenty-something.
A cash-flow statement or as it is more commonly known a budget is vital to any financial success you may have. If you do not have this document, it is virtually impossible to save or reduce debts. This simple yet powerful document allows you to see where your hard earned money is going. It will also allow you to know where you can cut or reduce expenses. By knowing where your money is going and how to reduce expenses you might surprise yourself and find out you can afford that much-needed life insurance. And it is possible to save for retirement or a big ticket item as well if you have a well thought out budget.
A will is something everyone who is over the age of 18 needs. Regardless of if you have appreciable assets you need a will to ensure your wishes and desires are carried out after your death. Otherwise the laws that govern your state will determine who gets your assets. The more complex your assets and estate the more likely it will be that you will need the assistance of an attorney. If you have little in the way of assets or do not have a complicated estate, you can use software to create your will and simply have it reviewed by an attorney.
In connection with a will, is a document called a letter of instruction that simply is a list of your wishes that need not be included in your will. It can be such things as where to find documents to your funeral arrangements and final resting place. And make sure that you include your digital information as well as we are now in a different age and time from that of our parents and grandparents.
Beneficiary designations can be the difference between the person you want to receive the benefits and the asset going through probate. The use of a beneficiary designation makes things much simpler in the matter that the asset will pass directly to the named person once you are deceased. This will allow the asset to avoid probate and pass the fastest to the named beneficiary. If you do not name a beneficiary, the asset will be placed in your probate estate, and that can be a long and costly process. Also, make sure that during life events you update your beneficiary designation so your current spouse and not your previous one will receive the benefits.
Life insurance is similar to beneficiaries as they involve them as well. Always make sure the person named to receive your death benefit is the person you want to receive it. It is never good when you do not keep this up to date, and an old spouse gets the death benefit. Also, it is important to know when you need and may not need life insurance. If you are single and no one depends on you, there may not be a need for you to have a large policy on yourself. If you are in a family, then there is a definite need to have some policy in place to protect your loved ones. In some instances, younger people may want to carry enough life insurance to cover their expenses and provide for a funeral so that responsibility will fall to their families.
Disability insurance is an important aspect of someone’s financial health. It is estimated that one in four people in their 20’s will become disabled at some point in their working careers. Without this insurance, it will be up to that person and their savings to carry them through the disability until they can regain employment. If you have substantial savings, you may not need this insurance but that is not the case for most of us. The insurance is both short-term and long-term in nature. Some employers will provide this insurance in the event they do the benefits will be taxable. If you were to buy this on your own, the benefits are tax-free as you paid the premiums.
Health care directives are also an imperative document for anyone over the age of 18. This is a document that will tell people how to act on your behalf once you are not able to do so for yourself. If you do not wish to be kept alive by artificial means, this is an imperative document for you to have. Otherwise, your next of kin will be able to do whatever they want wish may not correspond to your wishes. This document can, and in many instances does, go hand in hand with a power of attorney. In this document, you may give as much or as little power to someone else in the event you are unable to make decisions for yourself.
A final type of document or insurance you need to consider is long-term care. This is one that I do have mixed feelings on, but I am starting to see the major benefits of it as I get older. I did some research on the insurance, and it is not as expensive as I thought initially. For a person in their mid-40’s, you can get good coverage fo about $100-$125 a month on the open market. This insurance may not make sense for many people until they reach their late 40’s or early 50’s as it is still very affordable at this point. If you start earlier in life preparing for long-term care, you can self-insure if you invest wisely.
If you want more information or need additional help, feel free to contact me for assistance.
