- Your Medical Wishes
- Where There's A Will
- Insurance for Loved Ones
- Bank On It
- Back to Basics
- On the Home Front
- Clear Wishes
- Be Prepared
- Life Insurance 101
It was a sunny summer day when 62-year-old Henry Fields entered the hospital. He was already wondering when he'd get back on the golf course after knee surgery. He and the doctor talked about their favorite local greens as he was prepped for his "Routine" Surgery but it ended up being anything but routine. Several complications and a severe infection sent Henry into the intensive care unit, where he lapsed in and out of consciousness. His children were called to his bedside. Mary, his wife of 41 years, was suddenly being asked difficult questions—"Has he signed a 'do not resuscitate' document?…or a living will?" She suddenly realized there were things she and Henry had talked about, but had never made decisions on.
Fortunately, Henry pulled through, and while his golf game would have to wait, he and Mary began having some serious discussions. They wondered, "What would happen if they both were critically injured—or worse, died—in an unexpected accident?" They knew they couldn't leave their family in turmoil and began compiling information their loved ones might need for the future.
Your 'Emergency File'
Today's complicated lifestyles make preparing and maintaining an "emergency file" more important than ever. Hopefully, it won't be needed for years to come—but should something happen, family members would be able to move forward with decisions that reflect your wishes and intentions.
This file can be stored at home, with an attorney, in a safe deposit box, or with a loved one. Wherever you feel comfortable maintaining it, though, be sure that those close to you will know how and where to get access to it. Here are the basic documents for your file.
- Up-to-date health insurance policies. Include all related health and medical benefits available.
- If you're an organ donor, include a copy of your organ donor card. (You should always carry the original with you in your wallet or purse.)
- Religious or spiritual affiliation and contact information (if desired).
- Advance directives. By creating an advance directive, you're specifying preferences about medical care before you're faced with a serious injury or illness. This will spare loved ones the stress of making decisions about your care while you are sick.
An Advance Directive Can Include:
- A Living Will. This is a legal document that describes the kind of medical or life-sustaining treatments you would want if you were critically or terminally ill.
- Do Not Resuscitate (DNR) Order. This is a request not to have cardiopulmonary resuscitation (CPR) if your heart stops or if you stop breathing. (Unless given other instructions, hospital staff will try to help any patient whose heart has stopped or who has stopped breathing.)
- Durable Power of Attorney for Health Care. This defines who you have chosen to make health care decisions for you. It becomes active only if you become unconscious or are unable to make medical decisions for yourself.
Advance directives can be changed during the course of your medical care. If you cannot put your changes in writing, you can make them known while you are in the hospital. Tell your doctor and any family or friends present exactly what you want to happen.
Your file should contain a valid and updated copy of your will. If you don't have a will or other legal method to transfer your property in the event of your death, it will enter a process called "intestate succession." Your property will be distributed to your spouse and children or, if you have neither, to other relatives according to a formula designated by your state.
If you have minor children, naming a guardian for them is one of the most important considerations in your will. Typically, if one parent dies, the surviving parent will remain responsible for the children. However, complications arise if both parents die simultaneously or if one parent remarries. Unless you name guardians for your minor children in your will, the court decides who takes custody of the children in those situations. You will also assign an executor in your will. This individual will ensure that your wishes are carried out as outlined in the document.
A will is a critical component of ensuring that your desires are met after your death—and to help with a smooth transition for your spouse and family during a difficult time.
Copies of life insurance policies. Now is a good time to review your life insurance plans. If you purchased a policy years ago, it may no longer reflect what your spouse or loved ones need for the future—whether it be general living expenses, college, health care, etc.
Be sure to include copies of all your policies. Sadly, many life insurance benefits go unclaimed simply because beneficiaries were not aware of their existence.
- Copies of 401(k) and IRA accounts. In the event of the death of the account holder, these funds go directly to the named beneficiary.
- Retirement/death benefits. If you have a pension or other retirement income, be sure these are outlined. There may be benefits that come into effect upon your death.
A listing of financial and investment accounts. Include checking, savings, CDs and other investment account numbers. Be sure to provide contact information if you have a broker or financial advisor. You should also make a listing of all active credit cards so that your family can determine any debt that's owed. If you have accounts for children (such as a college fund), include these details as well.
If you own or have an interest in a business venture or partnership, include contact information and details.
Your family will need things like copies of your birth certificate. You'll also want to include your spouse's and your children's birth certificates, your marriage license (plus any divorce decrees), social security card, driver's license, membership cards, and information about any close relationships with affiliations/churches/clubs. (These organizations and individuals would want to be notified if something happened.)
If you have minor children, include their physician's contact information, as well as other relevant information such as schools, sports leagues and clubs.
- Copies of deeds and mortgages. In addition to these documents, be sure to include your home insurance policy (and additional coverage such as flood).
- Registration and titles to your cars, boats, motorcycles, RV, etc. Include all related insurance information and loan documents.
- Family contact list. A listing of contact information for family and friends will be extremely helpful. A holiday card list is a great place to start.
You and your spouse may have already discussed cremation, burial, religious ceremonies or other memorial arrangements. If not, this is a good time to make some decisions that will provide guidance to your family. If you've finalized your funeral or memorial plans, let loved ones know in writing. This will relieve a huge burden during a difficult time, and they'll be comforted to know that they are following your true wishes.
Although everyone hates to think about their own demise, the sad reality is that sometimes the unexpected happens. Compiling all of this critical information can seem daunting, but imagine the alternative. Your family would have to piece together this information without your in-depth knowledge.
The best bet is to gather this information (and update it annually), store it in a safe place, and continue to enjoy life. It could be years—or even decades—before someone needs to access your emergency file. But in the event something does happen, you'll have made the transition easier for the ones you love.
Purchasing life insurance, particularly if you are the breadwinner in the family, should be a basic part of your financial planning. This loss of income could devastate your family's current situation and future plans. And if there's a spouse that's working at home, it's equally vital.
Replacing the services of a spouse who's a caregiver for children and possibly elderly parents, plus one who provides meal preparation, household maintenance, cleaning, shopping and transportation, would require a substantial financial outlay.
The key is to look at the big picture. What would happen if something happened to you…or your spouse? Or in the worst case scenario, what if neither parent were around to care for the family? Would your loved ones be financially prepared to continue their way of life—including maintaining a home, paying for health care, school, college, etc.?
As with any financial plan, your needs change as you age. Families with young children are in a different financial life stage than those nearing retirement. While each situation is unique, your stage helps determine the amount and type of life insurance that's right for you. While many people have life insurance as part of their employee benefits, this often comes woefully shy of what would be ideal for their situation, and should be supplemented with a secondary policy.
Not many of us are experts at purchasing and understanding life insurance. Let's face it—it could well be one of the least often purchased items in your lifetime. So you may need a bit of help from an insurance professional.
Types of Available Plans:
- Term Insurance: This is the most basic, and generally least expensive, type of life insurance for people under 50. A term policy is written for a specific period of time, which can vary from one to 30 years. The face value remains the same throughout the term of this policy, although premiums may increase over time. This is a popular choice for families with young children.
- Whole Life: This type of policy combines permanent protection with a cash value component. It also offers the most guarantees. The annual premium, minimum guaranteed cash value and death benefits are all part of that premium, which accrues as cash value. As the policy gains value, you may be able to borrow up to 90 percent of your policy's cash value tax-free.
- Universal Life: This insurance is more flexible, with the added benefit of potentially higher earnings on the cash value component. Premiums can be increased, decreased or even deferred, and cash values can be withdrawn. You may also have the option to change the face values on a universal life policy. The drawbacks to this type of insurance include potentially higher fees and interest rate sensitivity.
- Variable Life: This type of policy is for those who consider themselves knowledgeable and risk-accepting investors. There are required annual premiums and minimum death benefits. However, there is no guaranteed cash value, and you have to select the investments for your policy. Buyers typically are offered a variety of mutual fund accounts ranging from money market funds to aggressive growth funds. You are permitted to borrow from this policy during your lifetime.