What We Worry About
Do you ever find yourself asking these important life questions?
What if my spouse or I die prematurely? What if one of us becomes disabled during our working years and is unable to work again? What if one of us needs long term care in retirement?
Those worries, those nagging thoughts, those questions that go through everyone’s mind at some point are what I call the “What Ifs” in life.
Your Crystal Ball
None of us have a magic wand or a crystal ball to see, forecast or fix future events. Therefore, the best thing we can do is to stop and ask ourselves, ok “what if ________ really happened?” How would we want that situation to go for us or our family?
Let’s look at the loss of life, for example. We know death is inevitable but the likelihood of it happening before we are near or in retirement is fairly small in comparison with the other common “what ifs” we are talking about.
But if you or your spouse were to pass away at a younger than expected age, many people would prefer to have some life insurance in place to help ease the financial burden of the lost life (and usually lost income).
The Role of Insurance
The concept of insurance is that you are deciding to protect yourself/family from financial risk and transferring the cost of that risk to an insurance company. But everyone’s situation is different.
Life insurance, for example, is often used to pay off a mortgage, provide for replacement income for a period of time, and sometimes to also cover the cost of education and/or care for children. If you don’t have a mortgage, or children at home, or the need for replacement income, perhaps life insurance is not needed in that situation. The need depends on your circumstances.
I am not always a believer that permanent, cash value life insurance is needed as often as it is sold. However, I did see how it was beneficial for a couple recently when he needed a few years of expensive long-term care paid out of pocket. After he had spent down a majority of their portfolio, his life insurance replaced what had been spent to basically replenish the portfolio for the benefit of his wife after he passed away.
What about disability risk? That risk is actually more likely to occur than premature death. Or what about the potential need for long term care? Statistically that risk is the most likely one to affect more of us than premature death or disability.
Visualize Your Own Circumstances
For each “What if,” we need to visualize our own financial picture, our lifestyle, our family circumstances and our values in order to ask ourselves if insurance is needed and if so, how much we can or are willing to afford.
There are other “What ifs” as well, related to our vehicles, our home/apartment, our day-to-day health care, etc. Those insurances are important as well. No matter which example we are talking about, we may need another person to be involved with our finances in many of those insurance situations.
So that brings me to my suggestion that you Insurance Summary to inventory your “What ifs.” The Financial Awareness Foundation (TFAF) has a great insurance checklist list that helps you summarize what insurance policies you have in place to help provide for those times when the “What Ifs” occur.
You can use the list to refresh your own memory about what you have in place, write “NONE” in the categories that don’t apply to you (which also helps prevent someone from looking for something in your files that doesn’t exist), and even write “see file” for details that you don’t want to take the time to duplicate.
I’m also a fan of compiling an insurance folder. You could make a copy of just the declaration page for each policy (which is a concise summary of the policy details) and keep it all in an insurance folder as an alternative or in addition to compiling an insurance policy list.
Your Financial Toolbox
A getting financially organized checklist can be especially important as we get older, are helping aging parents, or have been through the process of helping someone elsewhere good records were hard to come by. Taking a little bit of focused time can provide peace of mind, less stress later, and more clarity on what needs to happen. Think of this insurance inventory as just one more tool in your financial toolbox that also helps to answer those “what if” questions when they occur.
This article was first published at 60 and Me – a community that helps women over 60 live happy, healthy and financially secure lives.