Personal Protection: Tackling Death and Disabling Disability

Personal Protection: Tackling Death and Disabling Disability

You’ve just finished winning the semi-finals. You find out who you’re playing against next. They have some all-star players. They are REALLY tough!  You’re not only going to need great players, but you’ve got to have a game plan.  You can’t just wing it!  You’ve got to create some plays and run the drills until it is second nature.

This month, in the financial planning game, we’re getting ready to deal with a couple of Life’s All Star players who can knock out your key players and make you lose the game:  DEATH and DISABILITY.

HOW TOUGH ARE THEY?   If DEATH takes out either the quarterback or their go-to-guy or gal, the whole team can lose.  While it’s not often before age 65, it’s devastating.  The first rule in risk management is: If the consequences of a risk is catastrophic (even if not highly likely), cover it so it’s not catastrophic.  So when it comes to Death and Disability, it doesn’t mean you’re going to buy enough insurance on you or your spouse to put you and your family on easy street! But it does mean that you are going to make a plan and have enough assets and insurance combination, so you aren’t on homeless street!  Death takes out about 14% of people before age 65 and 100% after that!  Disability knocks out about 25% of the population at least once between ages 25 and 65, so almost 1 in 4 will face some version of this problem.  To understand the real impact and explore your attitudes, download these questionnaires, spend some time and write in your personal answers, and then share with partner/spouse or friend.  Sharing and discussing your views with someone else will help you see much more clearly!

SURVIVOR’S NEEDS DISCUSSION WORKSHEET

DISABILITY NEEDS DISCUSSION WORKSHEET

WHAT’S THE LEARNING PLAN?   We’ve broken it down into three parts to make it easier to cope with. Each part has PRE-Work, Classwork and Post-class Work.  This is your success work, so think of it as your defense drills. You’ve got to do the work and practice the plays. Club members:  CLICK HERE FOR THE MONTHLY SUCCESS WORK in your online classroom.

Part 1: Overview – Both of these players require you to take stock of three resources:

  • Emergency funds: These will slow down the impact, so you have time to bring in the other players.  (Need 3 – 6 months of routine expenses)
  • Combination of investments and insurance: These handle the bulk of the issue, but you need to know what you’ve really got. Use our request for illustration (contact your coach or go to your online classroom) to send off to companies ASAP, so you can be sure about what you have, how long it will last, and how the premiums will change over time.  This will also let you compare and see if you’re insurance dollars are efficient!
  • Crisis budget plan – How low can you go and what could you do to reduce your budget WHEN a crisis hits? At what point do you decide if you’d rather buy some insurance rather than live on less?

Part 2: Tackling Death – This section looks at what happens, what it might cost and how to calculate your insurance need. Our class will take you through these different issues and stages of life after a DEATH changes the game.

  • Cash needs (immediate outlays, paying off debt, funding specific goals)
  • Transition period
  • Child rearing and college years
  • Empty nester until retirement
  • Retirement
  • End of life transition

Once you’re clear on your goals and have compiled the resources from class one, it doesn’t take much time to figure out if you have the right amount of life insurance, too much or too little, and how develop a strategy to get the right teammates. We’ve lined up a low load insurance carrier (because we aren’t collecting commissions) who can give you multiple quotes from different companies to see if you’re insurance dollars are efficient and what the right amount of coverage would cost.

Part 3: Disabling Disability – This section explores both the various paths and financial consequences a disability can take and how to evaluate your resources, so we can match up needs with resources. Similar to death, you have the same stages, but different expenses. We look at the worst case scenario – a permanent disability (because if you’re prepared for that, anything else is a piece of cake…well, not really, but it will be manageable).

You also need to understand your resources:

  • Sick days, vacation days, and short term disability
  • Emergency funds & after tax investments
  • Long term disability, social security, and personal coverage
  • Reduced budget plan

Thinking through expenses and living on a reduced, crisis budget at different stages let’s you know how much income you need and for how many years.  Software can easily calculate how much life insurance or disability is needed to meet the plan you want.  Your coach can help you with these calculations with the software.  By creating a crisis budget and knowing what you would need to cut, you’ll have a game plan. So, if it happens, YOU know what you need to do to protect yourself from the worst…making decisions like this while IN crisis typically results in bad decisions.  That’s why it’s better to do it when it’s not eminent and with a SINGLE glass of wine!

What’s next? If you’re a club member, join us for the monthly action class on this topic scheduled for Saturday, May 14th @ 10 a.m. MT / 12 p.m. ET.  If you’re not a club member, but are interested in learning more about our services, follow this link to schedule your complimentary call today and find out if we are good fit! 

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