Step 7: Review Your Life and Disability Insurance Needs
Your Initial Financial Plan:
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Print Out The Eight Step Checklist to Keep Track of Your Progress
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Step 1: Calculate Your Financial APGAR Score
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Step 2: Put Together Your "Ow-Ow" (Net Worth) Statement
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Step 3: Prepare Your Monthly Cash Flow Budget
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Step 4: Set Your Savings and Debt Reduction Goals
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Step 5: Project If You're Saving Enough for Retirement
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Step 6: Work Through a Tax Projection (to Avoid Any Surprises Next April 15th)
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Step 7: Review Your Life and Disability Insurance Needs
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Step 8: Have an Attorney Draft Certain Essential Documents
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Have You Read...
Smarter Insurance Solutions
You are the unpaid manager of your insurance portfolio. If your household is like most, that's 16 percent of your budget. Yet many people do more research to buy a TV than they do to find a great insurance policy. It's easy to let costs soar and to overlook gaps in your coverage that conceal potentially big trouble. Janet Bamford is a proven expert at simplifying insurance and saving consumers money. Her book strips away the mysteries surrounding this often invisible investment. Most of us pay more than we have to - either in premiums or when our claims aren't covered - because it's so hard to understand policies issued by multiple providers for auto, health, life, homeowners, disability, and personal-liability insurance.
To order this book from Barnes&Noble.com, click on Smarter Insurance Solutions
Looking For a CPA, Lawyer or Financial Advisor who has worked with lots of other newlyweds and is familiar with the issues that affect you?
Ask an insurance salesperson how much life and disability insurance you need, and they'll probably tell you, "A lot!" The problem is, they're usually not very far from the truth.
Most newlyweds aren't in a position to be without disability insurance and life insurance. Even if you have some coverage through an employer sponsored plan, you might still need to purchase additional coverage on your own.
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Long-term disability insurance: Disability insurance protects against lost income in the event you become disabled. Most people in their working years should have at least a minimum amount of long-term disability insurance.
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Life insurance: Married couples with children, or consisting of only one working spouse, will probably need to purchase life insurance on both spouses. Married couples consisting of two working spouses with no children may not need life insurance right now. However, most financial advisors agree that it's a good idea to purchase life insurance while you're sure that you're insurable.
Financial Advisors
The easiest way to find out how much insurance you need is to seek the advice of a financial professional. If you're already working with someone, hopefully your spouse will feel comfortable with that person as well.
Otherwise, if you're looking for a financial advisor, how can you find one that you and your spouse can trust? The first step is to ask your friends, family, and business colleagues the name of their financial advisor and whether they're happy with the advice they have received. If you have a relationship with a CPA or an attorney, ask them for a recommendation as well. Then, after gathering some names, you and your spouse should meet with at least three different financial advisors to get a sense of how they work.
How Much Life Insurance Do You Need?
If you'd prefer to crunch the numbers yourself, there's lots of great information and useful calculators on-line. When working through the math, keep in mind that you'll be looking to your life insurance to provide liquidity so your family can:
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Pay off debts, such as mortgages and equity loans, auto loans, student loans, credit cards, and other personal loans.
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Pay for your final expenses, such as funeral expenses, unpaid medical bills and estate taxes.
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Set up an emergency fund
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Set aside money that will be earmarked for your children's educations and the surviving spouse's retirement.
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Provide a nest egg to provide income to the surviving spouse to ensure that your family can maintain its current standard of living.
Why re-invent the wheel? Instead, take advantage of a few on-line calculators.
How Much Disability Insurance Do You Need?
The questions should really be how much disability insurance can you get? As an incentive for people to get back to work as soon as possible after becoming disabled, most disability income policies will only cover up to 60 to 70 percent of salary.
Newlywed Alert
Now that you're married, don't forget to review who is the named beneficiary on all of your life insurance policies.
Lots of Great Tools and Information About Life Insurance is Available On-line at:
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What About Long-Term Care Insurance?
Generally, people wait until they are between the age of 50 and 60 before purchasing long-term care insurance. Most newlyweds, therefore, might be too young to consider purchasing this insurance.
However, have your parents purchased long-term care insurance yet? Remember, if your parents need to pay for in home care or nursing home care, how long do you think their savings will last?