Life has many unplanned and unexpected things that happen to each of us. Plus they can happen to anyone at any age. These two things are things that should not get overlooked. The first is life Insurance and the other is Estate Planning.
Now you could be thinking but those items are only for old people or rich people. Guess what, you would be very wrong… Yes, a part of the second one can wait until you are older 20-30. But the first everyone should have! Yes, that new baby or toddler should have life insurance.
I hate putting that on paper but it’s true, every age should have life insurance.
WHY LIFE INSURANCE?
The whole purpose of life insurance is to fill in the financial gap of losing a loved one. It’s taking a proactive step in case anything should happen. It will give you confidence that those you love; whether it’s a parent, spouse, sibling, partner, or child; will be taken care of financially.
This life insurance will pay for the cost of a funeral and burial, cover debts, and help with the loss of income.
Now maybe your in your 20’s or 30’s and your single, so no one depends on you financial. So you do not need life insurance, right? This is NOT true. I am speaking from a personal experience where a loved one passed away at the age of 30. They had no life insurance and the cost of the funeral plus other expenses fell on loved ones, in the amount of over $10,000. This is a lot of money for anyone, please please PLEASE save your loved ones one less heartache of finding or going into debt to pay the expenses. It could cost you less than $15 a month for a plan.
HOW MUCH COVERAGE?
This will depend on the person. If it is a child it could be the cost of the funeral and maybe medical bills. For someone older with a family, it would be to cover the funeral, debts (medical, home, student loans, etc…) and loss of income.
For example for me: my life insurance covers all our debts (mortgage and student loans) plus funeral and I have a term policy until the kids are older than 20. This way if anything happened to me, my husband would not have to worry about all the bills plus child care for our kids.
But for my husband; he is covered for more because he is our only source of income.
Again this depends on the person but a term policy will cost less. There are two types TERM and WHOLE life insurance. Plus other factors come into play with the cost of insurance (aka: your health). I wish I could say more but you should find a good life insurance company and ask them more about term and whole plus the cost. It may surprise you on the cost for a term policy!
WHY ESTATE PLANNING
Estate planning is preparing legal docs to make sure that their assets and health care wishes are honored but also that loved ones are provided for. Inside of Estate planning is wills and trusts.
Did you notice that I have an “&” between will & trust? I did this because you should have both! Also, there are two types of wills you should have, so let’s talk about these three legal docs.
- A will – this lets you tell the world to whom you want to get your assets. If you die without one, the state decides. Making a will is especially important if you have young children (18 or younger) because it is the best way to transfer guardianship of your kids. You can amend your will at any time, aka: change it. It also comes into play if you have a trust.
- A trust – this is a legal mechanism that lets you put conditions on how your assets are distributed after you die. This can plan when your kids get money for education, wedding, down payment on a house, or even all the money. One of the biggest benefits of a trust is that it allows your assets to skip the probate. Probate is a legal process in which a will is “proved” in court.
SIDE NOTE: We had a friend who’s father passed away. The father had a will stating that his house was to be sold and the money divided equally to his children. But because he had NO trust, they went to probate which cost money and time (about 5 months). Save your family the hassle.
- Living Will – is a statement of your wishes for the kind of life-sustaining medical intervention you want or don’t, in the event that you become terminally ill and unable to communicate.
Please note that a Will is easier/cheaper to create and if anything please please have a will and living will. But a trust will only help your loved ones so look into the option of creating one, maybe save for it!
DON’T OVERLOOK LIFE INSURANCE AND ESTATE PLANNING
I hope you see the importance of having life insurance and having a plan for your assets (Estate Planning). These two things could save your loved ones some heartache and money. It will give you the knowledge that your loved ones will be taken care of if anything should happen to you.
I personally have both and it is wonderful knowing my family will be taken care of. Take the time to research your options and save if you need too. But please don’t overlook the importance.