When you have a family, whether just you and your spouse or with children, one of your main priorities is to protect them. Many think of protecting their family physically, but financially is just as important. If you are the main breadwinner in your family, then financial security is a cornerstone of protection. Here are four ways you can financially protect your family.
Life insurance is essential for protecting your family. Life insurance offers benefits when the insured passes away. There are a few types of life insurance, but the most popular and most affordable is term life insurance. You can get quality coverage for much less than $50 a month depending on your age and health. You should always have a high enough benefit to cover all debt obligations and replace lost income.
We have covered the basics of life insurance here at iQuantifi. You can learn more about the different forms of life insurance, along with make an informed decision on which one would be best for you and your family.
An emergency fund is the backbone of being financially prepared. These are highly liquid accounts which enable you to pay for emergencies without going into debt. Emergency funds can vary in size, but many experts recommend six months to a year worth of expenses. When an emergency happens, you can pay for it from this fund and don’t have to borrow money via a loan or credit card. Emergency funds provide a lot of security and enable you to plan for the future without having to worry about where the money will come from. This is especially true if you lose your job.
This is probably one of the most overlooked forms of insurance for those trying to protect their family. Disability insurance covers you if you are unable to work due to a disability or illness. While life insurance provides a benefit to your family if you pass away, disability insurance provides a benefit while you are living and not working.
Disability insurance usually comes in a few different forms. You can get income insurance which will pay a monthly income directly to you when you are unable to work. Most insurance plans do not cover all of your current income, but closer to ⅔, so make sure you get enough coverage to cover your expenses. This type of insurance will help you pay your bills while you recover. Mortgage disability insurance provides funds to handle your mortgage loan when you become totally disabled. This will protect your house. Credit disability insurance will provide funds for a loan which has equal monthly installments. The payments are made directly to the financial institution.
Will (Estate Planning)
There is nothing worse than not having a plan when you might pass away or need your family to make decisions if you are unable. Wills and living wills provide solid planning groundwork. Many families don’t create a will because they are afraid to talk about the thought of “death” or aren’t sure what they will do with their estate. If you don’t have a will, then you leave your family trying to figure out what to do with your assets. At the very worst, you leave your estate in the control of the state you live in and that can really cause headaches.
A will is simply how you want your estate to be divided up when you die. Where should your money go? Who gets the house? Who will take care of your children if both you and your spouse pass away? These are just the basic questions a will can answer. You can be as detailed as you want in your will, but it is recommended to hire an attorney to help you create one.
A living will is a form of advance directive. This is a legal document which provides your family with the steps necessary to handle your care should you become unable to make decisions on your own. You can also set up a power of attorney, which will provide another person of your choosing the power to make decisions for you. These forms are short, but protect you legally when you are living, but unable to make decisions.
Your family is one of the most important parts of life. When it comes to protecting your family financially, you should make sure you have all of your loose ends cleaned up. No one ever knows when something bad might happen, but taking the appropriate steps early on can leave you with less stress. Take the time to come up with a plan to get the above aspects addressed and finalized.
By Grayson Bell, Staff Writer