If you are the primary breadwinner in your family, a lot of pressure comes with that role. As the main source of income, what would happen to your family if you suddenly died or were incapacitated? Sell the house? Move to a cheaper neighborhood? Switch schools? Would your family have enough money to last a lifetime?
Your family’s entire world could be turned upside down if a crisis happens. But rather than worry or give into fear, take these 5 steps to protect your loved ones should something happen to you.
1. Get Life Insurance (Or Update Your Existing Policy)
As your family’s primary source of income, you should have the biggest insurance policy. But exactly how much coverage do you need? It ultimately depends on your age, your spouse and children’s ages, your mortgage, the size of your debts, and more.
There are many ways to calculate the amount you should buy. You could follow the basic rule of thumb that says to buy a policy seven to ten times bigger than your current income. (1) Or you could use a financial calculator to help you decide.
2. Don’t Forget Disability Insurance
While you’re updating your life insurance coverage, don’t forget about disability insurance. If you were sick or injured, how long could your family survive financially without your income? For 48% of Americans, the answer is around three months. (2) That’s where disability insurance comes in. In the event of an accident, illness, or injury, disability insurance would pay out around 60% of your income. (3)
Your employer may offer long-term disability insurance, but these plans are often limited and inadequate. As your family’s primary provider, look into a private long-term disability insurance plan that can fill in the gaps left by your employer’s plan.
3. Keep Your Beneficiaries Up To Date
Anytime a major life event happens in your family—such as the birth or death of a loved one, marriage, or divorce—it’s time to update your beneficiaries. This is especially crucial if you or your spouse were previously married. The last thing you want is for an asset to go to your ex-spouse instead of your current spouse or child because you forgot to update your beneficiaries.
4. Set Up Your Estate Plan
Most people know that having an estate plan is crucial to protecting their loved ones, yet only 50% of Americans have one. (4) This means half the population is leaving their family and assets at risk should something happen to them.
The estate planning process may seem daunting, but it doesn’t have to be stressful or complicated. Here’s an overview of how to get started:
- Gather a team of experts, such as an estate lawyer and financial advisor.
- Choose trustworthy people to act as your executor, primary agent, and healthcare proxy.
- Create a will that spells out how you want your assets to be distributed and who will become your kids’ legal guardian.
- Consider setting up a trust fund for your heirs to ensure your legacy is protected and your assets bypass probate.
- Organize your financial documents and keep them in a fireproof safe, along with electronic copies. Don’t forget to update them periodically.
5. Meet With A Trusted Financial Advisor
A cookie-cutter financial plan just won’t work since everyone’s financial situation is unique. And while it’s beneficial to take the steps outlined above, it’s wise to also meet with a trusted financial advisor to make sure you’ve covered all your bases and left nothing to chance. The benefits of partnering with a financial advisor cannot be overstated. They can review your current financial plan, talk through your concerns, and offer a holistic view to protecting your family.
We at Match Point Financial know you’ve worked hard to build your wealth, and we welcome the opportunity to help you manage and protect it for decades to come. Schedule a complimentary, no-strings-attached meeting where we discuss your questions, concerns, and goals, as well as our process in working with clients so we can see if we’d be a good match. To contact us, call 352-207-8014 or schedule a complimentary phone call using our online calendar.
Chris Reed is a financial advisor and the founder of Match Point Financial. Since 2002, he has been helping people make informed choices with their money and pursue their financial goals and objectives. He started his career with MetLife and has continued seeking to provide his clients with the best possible service through A.G. Edwards, UBS, and finally through partnering with Cetera Advisors LLC and forming his own independent firm in 2010. Learn more about Chris by connecting with him on LinkedIn or register for his recent webinar Are Your Old 401(k)s Collecting Dust and Losing You Money? Here.
Financial Advisor: Securities and advisory services offered through Cetera Advisors LLC, member FINRA/ SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.