Does
Your Life Include a RIPE Plan?-Planning Tips Part 3
Author:
Janet L. Hall
Does
Your Life Include a RIPE Plan?-Planning Tips for Retirement, Investing, Protection,
and Estate Planning - Part 3 (Protection) by: Janet L. Hall
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 <g>.
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
