Most Action Heroes have a plan in place should the worst occur. The last thing they want to do is leave their loved ones destitute, or not have taken the time to share what they have put in place for them.
This is not an easy topic to cover as it forces us to consider not being here. This is awful, sad and distressing; however, if we get this part right, then at the very least we can take comfort in the fact that our loved ones are looked after and won’t have to sort out our mess while trying to cope with their grief.
Providing for loved ones
If anyone in your life relies on you, then it’s a good idea to consider how they’ll be provided for if you were no longer around.
These people could be:
Your partner – he or she relies on your income to be able to contribute to the mortgage repayments, or other living costs like rent.
Your kids – as a parent, think about all the work you do on a daily basis. The endless list of activities makes you the CEO of your family. This makes you invaluable.
Your business partner and employees – they rely on you to run the business, or perhaps you are the only one who can do a certain technical part of what you do.
There will be other examples where, should you no longer be around, it would be a massive shift in their world.
A lump sum of money can’t replace you, no matter how much we might joke about it, but it can replace some or all of your income if you are no longer around. It can cover the expenses of your funeral, along with paying off debts, providing for day-to-day costs and even potentially providing for additional childcare.
In the case of those of you with your own businesses, it can go towards hiring a replacement or paying down some business debt.
No matter what your situation is, the lump sum can simply make things easier for those you leave behind.
Generally the way people do this is with a life insurance policy. This is because very few of us have saved up enough yet to fund the lump sum, so in the meantime we pay for insurance to ensure our loved ones are looked after.
Now, some of you reading this will be saying to yourself “I’m single, and just working an everyday job. Surely this doesn’t apply to me?”
That might seem the case; however, consider that the cost of a funeral in Australia ranges from $4,000 to $15,000. Your family and friends love you, and will feel obligated to send you off the way they think you would want. Is it really fair that they also foot the bill?
And what about your credit card bills, car loan and other debts you have? Who’s going to handle those?
Take a moment to consider this. Putting a small amount of life insurance in place could make a big difference if the worst were to occur. Your loved ones are already dealing with losing you suddenly; surely we want to ensure we don’t add other worries to the pile.
In terms of determining how much you need, then no matter what your situation is there is, some logic that can be applied to work through the level of insurance cover you might need.
This is something that the experts can really help with, so, after you have given it some initial thought, visit an Expert and get them to work through your numbers. And the more complex or involved your situation, then the more I would encourage you to work through this with an expert. When I say complexity, I mean kids and dependants. The minute there are others relying on you then I would implore you to get advice.
Once you have arranged your life insurance, then you only need to tweak it each year to reflect any changes in your situation. I would therefore suggest you revisit it whenever you are going through your finances, such as when you are monitoring your debt or savings, or when you do your taxes.
Now, as you pay down your debts and build your savings, you may get to a point where you can consider reducing the level of life insurance you have. The thing to keep in mind is that, once the paperwork is done, life insurance actually pays out pretty quickly, therefore any bills or funeral costs can be paid immediately. If your family needs to sell assets like property to pay for things, then that is going to take much longer so you may want to keep an amount of cover to sort out short-term needs.
Who gets their hands on your intel?
For spy Action Heroes, they always have a plan that ensures that any secret information they have goes to the right person if they don’t survive their mission.
While I don’t imagine any of us have super-secret information we need to ensure gets into the right hands, we all probably have complex enough lives that we need to create a guide to what we have and ensure it’s clear who we would prefer to take care of things.
This is what a will and executor are for.
A will is simply a summary of what we have along with who we would like to have it handed over to. It can also cover who we would like to look after the people we care about, and how we would like our funeral to be.
The executor is the person who arranges all of this.
While there is a lot of technical detail to these things, the basic steps you need to go through are:
Document your wishes – allowing for everything you can think of and where you would like it to go.
Select an executor – this sounds like a simple enough thing, however people often just automatically make it a family member without thinking whether they are the right person to get everything organised. Some people will find this incredibly stressful, so have a good think about who you would like to do this, and ask them if they would mind.
Make sure it’s legal – not having a legal will is quite a common occurrence. The rules will differ by region; however the key thing is that an Expert reviews your will and ensures that it reflects your wishes.
Revisit it – this really sucks, I know. It’s bad enough you have to do it once, right? Well, as your situation changes, so do the needs of your will document, so I would suggest that whenever you review your insurance you also check to see if you need to update your will.
Sharing your plans
It is really important that the people you care about know that you have a will and that, in particular, the executor knows where all your information and paperwork is.
This is part of the reason I encourage you to get on top of things, as many people have been left after a partner or parent has passed away with boxes of paperwork and no idea where to start.
Make sure they know where your important documents are. This is not just your will. To get things sorted out they will need to be clear about what insurance policies you have and where all your accounts are, so this needs to be clearly summarised for them. Overall, we are simply trying not to leave your friends and family with a mess.
Aside from all the financial stuff, getting your affairs in order should also be an opportunity to write down the things that perhaps you find hard to say in person. If you write them a letter including your intentions for your money stuff, I would encourage you to also share what they mean to you. We so often forget to say what we truly feel and, when someone leaves us forever, we often regret not saying that more. I figure the people who are leaving feel the same way.
You don’t need to be a poet, just write down what you remember about them and what makes them special to you. A heartfelt message, along with some consideration for their financial future will be the best things you can do for them.