As we go through life and plan for our future, some of us develop a financial plan. This plan has many layers starting with a solid base. Part of this base contains one’s insurance portfolio to protect us against unforeseen events. Most of our insurance portfolios contain coverage for our home, auto, professional liability, life, disability and the list goes on. We sleep easier at night knowing our house is in order, but is it? Take a minute to really ask yourself: What if I die or become disabled today? Will my family be OK?
Since most people are reluctant to address this question, let’s consider some underlying questions. Obviously, the emotional impact of a death or disability is unique to all of us and will not be addressed in this paper. Though if a loved one is truly loved, then one’s death or disability should be prepared for just like the time spent planning a family vacation or a wedding for a child. In reality, most people spend far less time planning for their own death or disability.
Consider the following five questions:
People often buy their insurance policies and forget them as soon as the policy is issued. Annual reviews are extremely important to keep coverage at adequate levels.
Insurance agents are trained to understand that after leaving an appointment with a client, they should be prepared to get a phone call stating “My husband was hit by a bus today.”
Did this insurance agent discuss the importance of adequate level of coverage to the point the client agreed? Or did the client push back when counseled to purchase additional protection and consequently the client was underinsured because he did not heed the recommendation…
This occasionally means a client may not like to hear what is being recommended. It’s not much different than the case of the reluctant patient who does not want to hear that the proposed treatment is truly in their best interest.
A buy/ sell agreement is extremely important because it provides the seller a ready buyer at an agreed upon price or provides a formula to determine price. Multi-doctor practices without these agreements are in serious trouble if death or disability occurs to one of the practice’s partners. Trying to value a practice without an agreement, after the triggering event has taken place, is a recipe for disaster. The type of buy/sell agreement can vary and should be discussed with the practice’s accountant and attorney to determine which type is best suited for the individual practice.
Often life and disability policies are purchased to fund the buyer’s (individual or practice) obligation to purchase the shares from the deceased or disabled partner. The ownership of these policies is very important as the owner is the only person who can make changes to policies. An insured should never be the owner of his own policy under a buy/sell agreement. Depending on the type of buy/sell agreement, the ownership should rest with the practice, partner(s) obligated to buy the shares, or a trust established to hold the policies for the practice.
Any person who has any item they want transferred to a specific person should have a will. This item can be a piece of art or jewelry, auto or even a child! Without a will, the courts will determine who gains custody of minor children. A trust serves several purposes including control over asset management as well as estate tax mitigation.
Further, as one ages it is good to occasionally meet with an estate planning attorney to ensure the documents are kept up to date for both law changes and individual desires.
Believe it or not, this is often a concern as many couples rely on one spouse to pay the bills and take responsibility of household concerns to the point that a surviving spouse is at a total loss. As more people utilize online banking services, this issue has become more complex.
The person who has the responsibility for paying bills and online banking should sit down with their spouse and/or adult children and go over the process. This includes identifying websites, software and passwords that are needed if the primary person is not able to attend to the financial duties around their home. Notes should be assembled and placed in a safe deposit box or in-home safe.
Contact information for your financial advisors can be kept in a spot known to the entire family. Remember to update for new policies or changes in advisors. Our office routinely fields calls from family members asking if their parents had coverage with our firm. When asked why they called our office, the child will state that they
found a brochure or business card from our company. Proper planning would have saved this child a lot of time.
This question also brings up a larger point of concern. How many of us bring our spouse into conversations regarding our life insurance and investment decisions? This is crucial in the planning process, especially if it is the spouse who manages things at home. Incorrect assumptions are often made when a spouse is left out of the discussion.
In summary, a death or disability is a very traumatic experience. Adding financial or planning issues on top of the emotional loss can be devastating. Taking a small amount of time to ensure your financial house is in order will make a loss much less stressful and will allow you to confidently answer “Will my family be OK if I die today?”
For more information on protection planning and other financial services needs, contact Treloar and Heisel, LLC. at 800-345-6040 or visit www.treloaronline.com.
*Authorized for accountancy services in the following states: IL.
About Treloar & Heisel
Treloar & Heisel is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.