Archive for Insurance

Nov
12

A Death In The Family

Posted by: | Comments (0)

White Dove in FlightTwo weeks ago, my mother-in-law passed away very unexpectedly.  She left a surviving spouse, four children, seven grandchildren, and two great-grandchildren.  She did not leave any life insurance.  She did not have any sort of pre-paid burial plan in place, nor were any funeral arrangements made in advance.

When a death occurs in a family, the living are busy grieving.  On top of the emotional hit that happens, there are many things to do when it comes to a funeral.  We had people coming in from out of town and out of state to stay here for most of the week, others stopping by as they were coming and going.  In addition to shopping for extra groceries, we were also shopping for new clothes to wear to the service.  For almost a week, daily trips were made “home” and back, driving more than an hour each way.  A lot of stress was added to the grief.

Take a minute, right now, to stop and think about your own situation.  What is in store for your loved ones when faced with your demise?  It could happen tomorrow, you know – or six months from now.  Or six years.  Or 60 years.  There is only one thing absolute in life, and that is death.  You never know when it is going to happen – and that’s the rub.  You just don’t know.

When death happens, when your family is grieving, do you want your loved ones to suddenly have to deal with a lot of decisions concerning your death and funeral?  There are medical decisions to be made, legal decisions, financial decisions, plus many more.  Do you want family members arguing about what casket to choose, what music to play, or what pictures should be selected for the video memorial?  Do you want your loved ones to make your funeral arrangements based on what may or may not be in their bank account, or yours?  Do you want to leave your loved ones struggling emotionally and financially over what kind of service they want to give you vs. what they can really afford?

Death is a necessary part of financial planning.  You should treat life insurance as a mandatory expense, as mandatory as your car insurance, or your homeowners policy.  There are situations where life insurance may not be a viable or affordable choice, and there are alternatives.  Pre-paid funeral plans are available through just about every mortician or funeral home.  Buy a plan now and have it in place for the future – it doesn’t matter if you are 26 or 76.  Do it now.

A funeral home here in my village has a pre-paid program that allows you to make all of your funeral arrangements in advance.  You decide what kind of ceremony to have, whether there will be a casket and what color, what kind of vault, and does that vault need a name plate, what kind of flowers, the type of music, what kind of printed funeral programs, how many pall bearers, whether there should be a family car – there is a long list of decisions when it comes to a funeral. Prices are locked in at the time you make the arrangements.  The funeral home will present you with a price quote and a contract.  You can pay in full or set up a payment plan.  Payment plans are normally set up through a third party (usually a bank), who collects the money in trust and forwards it to the funeral home.  Everything is arranged and paid for in advance.  When the time comes, your family will be dealing with the only thing they should have to deal with at your passing – their grief.

Most funeral homes will also work with you if life insurance is pending when death occurs.  When my grandmother passed away twenty years ago, she had all of her funeral arrangements in place, down to her dress.  She had made a partial payment when she set up the arrangements years before, and she had life insurance.  The funeral took place, and a month later when the life insurance paid out, the balance due was paid.  If you do have life insurance that will be used for your funeral, you still need make your own funeral arrangements.  Don’t leave that kind of stress to your family.  It’s going to be all they can do to handle the loss of you.

Can your survivors survive the sudden financial burden of a funeral?  A few years ago, a grandfather died in our family.  We soon found out that his life insurance policy had been cashed in a few years before, and there was no pre-paid funeral plan or funeral arrangements made in advance.  It fell to a few of the grandkids to pay for his funeral.  At the time, we were able to write a check for our portion – but can your family do the same?  Can your family afford to be saddled with a bank or finance company loan and a monthly payment that will be due 30 days after your death and continue for 2 to 5 years?

None of us want to leave our loved ones with these type of circumstances.  Pick up the phone, get quotes on a term life insurance policy, and set that up to automatically pay through your bank account or a credit card.  Check into pre-paid funeral plans, check the history and reputation of the company, make those plans, and pay that bill while you are living.  Do it today, and do it for your family.

You must prepare for the only absolute in life you can count on:  your death.

 

Share Button
Oct
11

Emergency! Emergency!

Posted by: | Comments (2)

 

No Job SignSix months ago, April 6th, on Good Friday (oh, the irony!) – my husband lost the job he had for 13 years. This came completely out of the blue, with no warning. I now know what the bug hitting the zapper in the back yard feels like.

Once the initial shock wore off, we took stock. We had an Emergency Fund, and my husband was owed vacation pay. When I added the two together, we had approx. $25,000 cash. I knew we’d be alright for a few months with the emergency fund, but I also knew we’d have to cut spending to the bone. We didn’t have any credit card debt, nor any car payments, which was a big plus. Those are expenses that can drain finances quickly. We did have a mortgage, insurance, utilities, food, gas – basic and necessary expenses that kept the roof over our heads, the Internet lights on, and food on the table.

I wasn’t overly worried. MrBP is good at his job. I knew the phone would be ringing fairly soon with a job offer, or he’d be able to network a bit and find an opening. This layoff was going to be just a little bump in the road in the overall scheme of things, and we would be fine.

The first thing MrBP did was file for unemployment. Unemployment in this country is not fair to the unemployed, as I’m sure anyone out of work will tell you. MrBP did qualify for the maximum amount of weekly unemployment: $320.00. Wow. I know $320 is better than nothing, but a month of unemployment checks still wouldn’t cover the mortgage. MrBP could also draw unemployment for the maximum number of weeks: 20. Another Wow. Twenty weeks of unemployment equals thirteen years of work history. If he had worked the for company for 30 years, 20 weeks was still the maximum number of weeks he could draw. There is something wrong with that government math!

When a person files for unemployment it takes some time to get that first check. Remember that vacation pay I mentioned? That had to be claimed as income for 3 weeks.  (If what you claim is more than the amount you’re eligible for – you don’t get paid unemployment that week)  At the end of the 3 “vacation” weeks, a waiting week had to be “put in”. This happens to everyone – the first week you are unemployed basically doesn’t count – for anything. Unemployment benefits don’t become available until the second week a person is out of work. Checks don’t come the second week either – the process of being approved for unemployment can take 2-3 weeks, or much longer. Considering the majority of the working population lives paycheck to paycheck, losing a job can be a big deal. All of this waiting for money is going on when people need that money the most!

MrBP was out of work for a month. He never did draw an unemployment check, because the 3 vacation weeks and the 1 waiting week took up that month. We had enough money in the bank that life went on as normal – we just didn’t spend any extra, we didn’t go out to eat, we didn’t go to the movies. Cutting out all unnecessary spending opened my eyes to the kind of money we did spend in some areas. Because there was enough coming in, neither of us had paid much attention to some of the conveniences that were going out. (After all, life shouldn’t be all work and no play, right?)

If we hadn’t had our Emergency Fund, life would have been a completely different story. We would have been in financial trouble fast, as fast as the bills came due. We spend $3000 monthly on house, utilities, insurance, and cell phone payments, but that doesn’t count food, gas for the cars, incidentals, etc.

Emergency Funds are as necessary as homeowners insurance is if you own your home, as necessary as car insurance is if you drive a car. Everyone should have an Emergency Fund. If you don’t have one, you need to start one. Don’t tell me you can’t afford one – you can’t afford NOT to have one!

An Emergency Fund is intended to replace income if you can’t work, but it’s also nice to have when the car needs major repair or the AC unit quits on a 100 degree day in July.

Most financial planners recommend having 3-6 months worth of living expenses saved. But, due to the state of the economy, the average length of time a person is unemployed these days is 9 months (Bureau of Labor Statistics). If you’ve only got a 3 month cushion, what are you going to do the other 6 months when the rent is due, and you’re still looking for work? I know what you’re thinking – you’ve got those credit cards in your billfold, and you’ll fall back on those if you really need to. Let me ask you this: when the credit line is used up, how are you going to repay that debt?

Starting and regularly adding to your Emergency Fund may feel daunting, and may seem like an insurmountable task.   The good news is, you may not need as much as you think. Sit down and make a list of every single bill you pay every month. Go through your bank statement and write down all debit card transactions and what they were for. Check the bank statement for ATM cash withdrawals, and write down what those were for. Get out your credit card statements and add those transactions to the list of money going out for the month. Add all the numbers up.

Now, cut out what isn’t absolutely necessary. The mortgage payment is necessary. $5 at Starbucks twice a week is not. Look closely at bills such as cell phone, cable, gym memberships, newspaper delivery, lawn care – if it came down to it, are these as necessary as food and electricity? No?  Cut those out. Once you figure out the basic living expenses you need to survive, multiple that by 12. Write that number down. Your savings goal is 12 months of basic living expenses in an Emergency Fund.

Work out a savings plan, even if all you can do is save $1 a week, or $25 a month, or the change from your pocket at the end of the day. Put that money in savings and forget it. Cut out one or both of those lattes every week and put that money in savings instead. Treat your Emergency Fund like it’s your water or gas bill, figure out how much you can save regularly, and pay the savings account just like it’s the mortgage company.  Start today.

I was glad we had savings to fall back on. We spent a lot of it, and it went faster than planned because the AC unit did break down on the hottest day of the year, along with a few other things.

During the 5th week of unemployment, the phone rang and MrBP was offered a job – at the opposite end of the state. A 3 hour drive, one way, from the home we’ve lived in for the last 24 years. Whoa.

The new job – and where it was at – brought up a lot of questions: were we going to relocate? Sell our home here? Rent it out? Rent in the new location, or buy? Where would MrBP live for the near future – with family in that area, and if so, for how long? How much was all of this going to cost? There were so many variables and many unknowns six months ago!  A few things didn’t work out, while great truths were learned … stay tuned to find out what happened!

Share Button
Oct
04

Free One-on-One Financial Planning Help

Posted by: | Comments (0)

Financial Planning Day What is Financial Planning?

What financial goals would you like to obtain?  What’s on your “Wish List” when it comes to money?

Do you want to buy a home?  Do you own your home, but dream about a vacation home in the mountains or a weekend home at the lake?

Do the kids want to go to Disney World next summer, but you’re not sure you can afford a local pool pass for the season?

Are you able to save today for college for the kids, or have you put that off until tomorrow? Tomorrow is already here, you know.

What about your retirement – how many retirement accounts do you have, and do you regularly fund those to the max?  Is your retirement diversified, or do you have all of your eggs in one basket?  Can you retire without Social Security and live in the manner to which you are now accustomed?  Have you thought about retirement very much, or is that something you’re going to do “tomorrow”?

Financial planning is a must, no matter who you are or what your circumstances are.  What is your financial plan right now?  What strategy do you have in place – right now – that will allow you to retire financially independent?  Do you know where to start to make your financial dreams your reality?  Do you know how to make your dreams your reality?  Are you lost when it comes to implementing changes to your money situation?

We all have money dreams, but most of us aren’t smart enough to know how to make our dreams come true.  We don’t have the time to do the research we need in order to know where to invest, or how, or how much.  We don’t know what goal to tackle first.  We aren’t sure of the quickest way to the goal line.  We’re lost when it comes to the math.  We need help.  During the month of October 2012, personal, one-on-one help is available in many cities across the country.

Financial Planning Days Initiative

During the month of October 2012, “Financial Planning Days Initiative” is taking place.  Four different non-profit organizations**  are bringing together highly qualified, professional, Certified Financial Planners to provide one-on-one counseling sessions to the public.  There will also be classroom style learning sessions held, and free packets of financial literature given away.  All of the work being done by the professionals is on a volunteer basis, and no payment is expected.  Services are free.  You can sit down with a financial planner and ask for personal advice – with no strings attached.  The volunteers will not try to sell you anything, they won’t even give you their business card.  No business will be promoted at all – the professionals are there to answer your questions and help – that’s it.  (If you are a professional, certified financial planner and would like to volunteer, you can find out how here)

Gather your questions about retirement planning, debt, credit issues, budget questions, taxes, college, mortgage loans, investments, estate planning, small business finance, and insurance together, and find out if the Initiative is available where you live:

Click here to find a Financial Planning Day in your area

A list of 2012 events can be found by clicking here

A list of participating states:

  • Arizona
  • California
  • Colorado
  • District of Columbia
  • Florida
  • Illinois
  • Indiana
  • Maryland
  • Minnesota
  • Nebraska
  • New Jersey
  • Ohio
  • Oregon
  • Pennsylvania
  • Texas
  • Virgina
  • Washington

Can’t go?  You Can Still Get the Same Information Packet Being Handed Out

If there is no Financial Planning Initiative in your state, the free information packet information is still available to you and can be found at the links below.  Take a look at the information available, and give yourself a quick education in the basics of financial planning.  Pick up tips and advice on everything from a college savings plan to long term care insurance.

You Can Organize & Simplify Your Financial Life:  A How To Guide

Saving and Investing:  A Roadmap to Your Financial Security Through Saving and Investing

Savings Fitness:  A Guide to Your Money & Your Financial Future

Smart Saving for College – 529 Plans & Other College Savings Options

Guide to Disability Income Insurance

Guide to Long Term Care Insurance

Consumer Guide to Financial Self-Defense

 

** Certified Financial Planner Board of Standards, Inc.®, Financial Planning Association®, the Foundation for Financial Planning, and the U.S. Conference of Mayors

 

 

Share Button

The Bank May Own Your Home, But Don't Let Them InsureA representative from the Sheriff’s office knocked on the front door, clipboard in hand. She was there as a courtesy, to inform the homeowner that first thing the next morning the sheriff would arrive to move everything in the house to the curb. Barb was being evicted, courtesy of “The Bank”. The homeowner knew the eviction was coming, she just didn’t know when. Filing Chapter 13 Bankruptcy six years previous and jumping through the required hoops, court appearances, and red tape paperwork had not saved her home in the end.

Fifteen years ago, starry-eyed Barb was living the American Dream of Home Ownership the day she signed loan papers and bought her first house. She had a good job as an employee of the state where she lived, earning a decent wage, had a retirement account, some money in the bank, and a savings account. Buying a house seemed like the next logical step, and she took it. The payment was certainly cheap enough, just slightly over $550 a month – monthly rent was more than a house payment! It made sense to buy instead of rent!

Things were good for quite a few years, but due to budget cut-backs, Barb lost her job with the state. The economy was starting to slow down and unemployment was rising. There were suddenly a lot of 30 and 40-something women out there, looking for work. When her savings ran out, she cashed in her retirement account to pay the bills. By picking up work here and there, Barb was able to stretch what money she had saved for retirement and pay bills for two years. Before she did hit that area slightly beyond broke, Barb was able to get a new job with a non-profit agency. She was back to work full time.   Things began to look up.

One day Barb got sick. High health insurance deductibles, co-pays, percentages the insurance wouldn’t pay, lost wages from missed work once the sick pay ran out. Everything began to gather into a perfect financial storm that would culminate in losing her home. Barb had no clue what was coming down the track.

During the time Barb was sick, she missed paying the premium on her homeowners policy. She remembered getting a letter from “The Bank” – it was in a stack of mail that was waiting for her when she returned home from a hospital stay. The letter told her that because “The Bank” had a financial interest in her home, and because the insurance policy protecting the dwelling had lapsed, “The Bank” had purchased a policy to cover their interest in the house. Barb had so many things to worry about that day, she breathed a sigh of relief that catching up on past-due insurance premiums wasn’t such a pressing issue anymore. There was still insurance on the house in case it caught fire tomorrow. “The Bank” was also going to be nice, and add the insurance premium to her house payment. Barb put all worry about homeowners insurance out of her mind at that moment.

Barb got sicker. She was in the hospital again, and again. Bills were piling up, and for some reason her monthly mortgage payment had gone from a tad over $550 a month to almost $900. She didn’t understand what the $400 listed each month in the “Miscellaneous” column was for, and repeated calls to “The Bank” didn’t get any answers.

Things were getting bad financially. The utilities were turned off, but Barb was able to get help from a non-profit agency to turn them back on.  She started selling off her belongings in garage sales, but before long there were too many bills, and there was never going to be enough money.

Barb consulted an attorney, who took one look at her financial situation and advised her to file bankruptcy to stop the collection agencies and save her house.  She filed Chapter 13 Bankruptcy, and was set up with a five year repayment plan.  Barb’s plan was to use this breathing room the bankruptcy would give her to catch up on her past-due mortgage and try to get a handle on her health.

Barb needed help with her with income tax filings. She had been so sick she hadn’t filed anything for a few years, and the Bankruptcy Court and the IRS were demanding tax returns. While looking through her paperwork, I realized what that $400 a month tacked onto her mortgage payment was for: it was the premium for the homeowners policy “The Bank” had bought when her policy lapsed. She had been charged this “premium” for at least two years, perhaps three, which had thrown her into a very deep hole. I immediately called my insurance agent and put him in contact with Barb. He was able to write a policy on her home that cost approx. $100 a month. We were able to get “The Bank” to stop charging her for “The Bank” policy – but the damage had been done. That “past-due balance” hole was pretty deep at this point.

Barb got sicker. Barb had major surgery that required a lengthy hospital stay. She was only home from the hospital a few days when she had a heart attack in the middle of the night. The doctors told her it was a miracle she was able to wake up and get help for herself. Back to the hospital she went, and when she came out a few weeks later, she was permanently glued to a portable oxygen canister. Barb lost her job.

It took about six months, but Barb was qualified for and started receiving Social Security Disability. It didn’t make much difference by that time – her Social Security check is $1100 a month, the mortgage was in such arrears due to the added “miscellaneous” expense and simply not being paid, there was no catching up. Barb could maintain, but she could not catch up.

In May of this year, Barb received a letter from “The Bank”, telling her that her home was due to be sold at a foreclosure sale. “The Bank” bought it at that sale and changed the county real estate records to show they were the owner of record.

Barb started looking around for income based housing, and found out there was a three year waiting list for anything
she could afford. She knew she couldn’t stay in the house indefinitely, but what does a person do in a situation like this? They stay where there is a roof over their head. Last week, the Sheriff’s office representative showed up at the front door, clipboard in hand. When she saw Barb was on oxygen, and was able to see that she was under the care of a doctor, she told Barb to show that documentation to the Sheriff when he did arrive with a crew – it might make a difference, it might not.

Barb was able to work with the sheriff to avoid having her entire household moved to the curb. Friends came with a trailer, and within a few days everything she owned was packed and moved into a friends garage and basement. Within the week, Barb was out of her home of 15 years and living with a friend. She is looking for a rental home she can afford. With only $1100 in disability income a month, it isn’t going to be easy.

This is not an isolated case. “The Bank” that Barb paid her mortgage to is a large, national bank. Last fall, my in-laws stopped by my house one day and asked me to take a look at mortgage papers they had received from their bank – which is a small bank in my hometown. This “hometown” bank has a few branches in neighboring villages, but it is not a large, national bank, nor a large bank chain. My in-laws were attempting to refinance their existing mortgage in order to take advantage of a cheaper interest rate. I knew my in-laws paid their own home-owners insurance, and I knew the local agent they did business with. I was surprised to see a line item in the refinance papers for “home owners insurance”, and the cost: $2000 per year. The current insurance policy with the local agent is around $700 per year.

If your finances deteriorate to the point that you cannot pay the insurance premiums on your home, don’t automatically let the bank buy a replacement policy for you.  Talk to your insurance agent and see what can be done to keep the policy you have now.  If you are signing loan papers, pay attention to every line item in the loan disclosure paperwork and the loan papers themselves. If you see something you don’t understand or do have questions about, ASK. The law requires that your lender give you an answer. Ask questions until everything is explained to your satisfaction. It is your money, make sure you understand the cost.

For those of you that are asking the question, “Does the bank make money on those premiums, is that why they are so high?” The answer is, “Yes, you bet they do.”  Writing that policy to cover that loan through an insurance company (working with the bank for that very purpose) nets the bank a tidy commission.

Share Button