This week we’re going to talk about insurance, which is another word for protecting ourselves and those who care for us from financial shocks.
If you experience a financial crisis, cash and insurance are going to come in handy. Let’s talk about ways to save for an emergency fund and insurance to consider (or review, if you already have it.)
1 - Save for an emergency.
My dad’s financial planning consisted of a single mantra: “Save until it hurts.” It served him well and it works for me...but I know it’s not that simple for everyone. If you need some help on how or how much to save, check out one of the many personal finance sites out there. I like Kiplinger.
Keep in mind that not all your cash has to be in a savings account to count as emergency funds. For example, I try to contribute the maximum allowable in my Health Savings Account each year. When unexpected medical expenses come up, I pull from there to pay those bills. No penalty, no delay.
2 - Pave the way for help
You may need help managing your financial accounts for any number of reasons in the future. You’ve already decided who you will ask to help you. Now, contact your bank and find out what you need to do to give that person access to your most important accounts. Remember, you may not be able to use your own Power of Attorney documents, and it’s best to find that out now rather than in a crisis.
3 - Review your insurance
If you’re anything like me (or my dad), you don’t think much about insurance. You have it, you pay for it, you use it every once in a while. I trust you know how to access your policy online and give it a look. This article gives a great overview of how to review five different types of insurance policy.
Do You Need Long Term Care Insurance?
I often get asked if long term care is "worth it". There isn't a clear, simple answer (at least I'll tell you straight!) The Administration on Aging has a great online guide to long term care that will help you understand the basics, including costs and ways to pay. Start there before talking to any insurance agents.
4 - Consolidate, change, and document
If you’ve overcome inertia and reviewed your policies, great! Now take that extra step and cancel what you don’t need. Downgrade or upgrade policies that don’t fit your life or risk profile anymore. Invest in new protections. And then...document what you’ve got. Again, not all the gory details. Just enough that your friendly financial decision maker will know what to do and how to access the policy details in a pinch.
Here’s what to include:
Insurance Policy Information
Type of Policy
Name of Insured
Name of Carrier
Main Phone Number
You can store the information on the Insurance page of the Life in Motion Guide Finances section, or create your own document.
Try it out for free by downloading the printable forms here:
Download the Finances section of Life in Motion Guide for free. This printable PDF contains all the forms, checklists, and inventories you need to create a record of your "money matters."
Go on now, get it done.
And, let me know how it goes!