8 – Watch Your Back

Life happens and sometimes life’s surprises will be unpleasant. The action items below will help minimize the negative consequences for both you and your loved ones.

Take Action:

  • Make a will (or establish a revocable trust)
  • Review beneficiary designations and the title to property
  • Execute an Advanced Healthcare Directive
  • Be adequately insured

Commentary:

Even if you have never signed a will, you still have one. State laws dictate who gets your money and stuff should you die without a will. Make a will or your least favorite relative may end up with your prized possession!

For some accounts and types of assets your will makes no difference. Beneficiary designations of IRAs and 401(k)s supersede instructions in a will or trust document. Likewise, real estate owned with “rights of survivorship” also ignore a will. Review the beneficiary designations and titles to your properties regularly.

Help your family and medical caregivers honor your choices about life-sustaining medical treatment should your medical condition no longer allows you to speak for yourself. Execute an Advanced Health Care Directive. Appoint a Health Care Representative with a Durable Power of Attorney. Don’t ignore the equally important need of attending to your loved ones’ pain and of saying goodbye.

Bad things more frequently occur when you are still alive—and that’s what insurance is for! You have varying “exposures” for which insurance coverage is critical:

  • Property and casualty (which includes home, renters, auto and umbrella liability)
  • Health
  • Disability
  • Life

Take advantage of insurance coverage available as an employee benefit. Employer-provided health and disability coverage is often the most affordable.

When your household cashflow is “skinny,” consider term life insurance. Annual Renewable Term is the cheapest in the early years of a policy, but premiums steadily increase. Evaluate the costs of “level premium” term coverage for 10, 15 or 20-year time periods.

Work with a reputable insurance agent and understand the different scopes of coverage available for property and casualty.