During our lifetimes, we strive to enjoy, excel and succeed, buying property, making investments for growth and purchasing trophies of our success in the way of holidays, activities, latest technology, cars and jewellry. Of course, all of these things can be fun and are partially what living is all about. But as we mature, find a partner and possibly have children, security and their futures begin to shape our goals.
But when it comes to financial planning, one area that often gets overlooked, usually when we have financial dependents or children, is sufficiently protecting future income or home life in the event of anything unexpected happening to our longevity or that of our partners.
Many employers provide some life insurance as part of their employee-benefit coverage. That may be the first time someone encounters life insurance and often they will have little idea that two or four times their salary isn’t as much as they initially think when they figure that it would have to cover most or all the expenses for loved ones in the absence of their income for possibly 20+ years.
Also, if you leave the job, it’s usually the type of insurance that doesn’t “move on” with you and there can be periods of non-cover risk. The danger is either “shortfall” or “total exposure” to an unforeseen event. Despite best intentions and expectations, sadly these things do happen. So, why is this so often overlooked or ignored? Well, it’s not the type of topic we like to think about, there can be illogical superstitions making us avoid the thought, we can mistakenly think that the house and the employer will provide enough security and frankly, there are much more exciting things to think about. So instead simply allocate funds toward that happy existence!
In addition, if you are a single adult with no financial dependents or children, this is something that you shouldn’t really need to concern yourself with. Or is it? Sadly, such unfortunate things do happen and without any contingency or forethought, can lead to group donation requests, GoFundMe efforts or families left with a burden. Bank accounts are frozen, assets can either take months to unravel during probate and legal delays (even with a will), and things like crypto holdings can possibly be lost forever (who else would know how to access such accounts?).
However, it is today possible to arrange additional international savings accounts or investment accounts with a form of trust, to specify beneficiaries (at no additional cost). This then removes the asset from your estate under a circumstance that covers any expenses that such a terrible event would cause, reduces the capital release time and directs the funds to your loved ones at a time they would need it most.
Transporting remains back to one’s family is a costly event and not covered by medical insurance. Again, very sadly, these things do happen and family’s are otherwise left with a burden. For families overseas, trying to deal with locals banks would be a challenge. They would be required to attend in person, or find a suitable power of attorney, with the right pile of documents.
Ultimately, there are often unthought issues or unconsidered possible problems that have relatively simple solutions with the right help and guidance. If any of this sounds a bit daunting, just talk to a professional adviser, often at no cost, to help you figure out the amount of shortfall, solutions and give you options to fit your budget. If you don’t have an agent, feel free to ask for a free guide here.
Having a financial umbrella or protective cash parachute is sensibly not something to consciously avoid. By assessing the situation, you can take simple measures to give yourself even more peace of mind. You can then go back to focusing on the exciting things that life offers knowing that unplanned events will not cause someone else a financial sink hole. With most things in life, if you cover different outcomes and spread risk, you can more confidently rest assured. As the author of Think and Grow Rich said, “Don’t wait, the time will never be just right”. Make it count, whether you are a parent or indeed, even single. Make time work for you rather than against you. Seize the day; we never know what tomorrow may bring.
For more informed decisions related to your own circumstances, speak with your trusted financial adviser. moneytalks@thenanjinger.com / WeChat: 13671679174
