Are You The Family Breadwinner? How to Protect Your Family
By Jack Mahoney, CFP®
As the primary breadwinner, what would happen to your family if something were to happen to you? Would your family have to sell the house? Move to a more affordable neighborhood? Switch schools? Or would your family have enough money to last a lifetime?
There’s a lot of pressure that comes with being your family’s primary source of income. If something were to happen to you or your job, it could turn your family’s entire world upside down. Thankfully, there are steps you can take to protect your loved ones should something happen to you.
1. Get Life Insurance (Or Update Your Existing Policy)
As your family’s primary source of income, you should have the largest insurance policy. But exactly how much coverage do you need? It ultimately depends on your age, your spouse and children’s ages, your mortgage, the size of your debts, expenses, and more.
There are many ways to calculate the amount you should buy. You could follow the basic rule of thumb that says to buy a policy seven to ten times bigger than your current income.[1] Or you could use a financial calculator to help you decide.
2. Don’t Forget Disability Insurance
While you’re updating your life insurance coverage, don’t forget about disability insurance. If you were sick or injured, how long could your family survive financially without your income? For 48% of Americans, the answer is around three months.[2] That’s where disability insurance comes in. In the event of an accident, illness, or injury, disability insurance would pay out around 60% of your income.[3]
Your employer may offer long-term disability insurance, but these plans are often limited and inadequate. As your family’s primary provider, consider a private long-term disability insurance plan that can fill in the gaps left by your employer’s plan.
3. Keep Your Beneficiaries Up To Date
Anytime a major life event happens in your family—such as the birth or death of a loved one, marriage, or divorce—it’s time to update your beneficiaries. This is especially crucial if you or your spouse were previously married. The last thing you want is for an asset to go to your former spouse instead of your current spouse or child because you forgot to update your beneficiaries. At Simon Quick we review beneficiaries with our clients as part of our ongoing reviews to ensure this is revisited periodically.
4. Set Up Your Estate Plan
Most people know that having an estate plan is crucial to protecting their loved ones, yet only 50% of Americans have one.[4] This means half the population is leaving their family and assets at risk should something happen to them.
The estate planning process may seem daunting, but it doesn’t have to be stressful or complicated. Every family’s situation is different, but we can work with you to make sure that you are thinking about all variables and asking the right questions. Here’s an overview of how to get started:
- Gather a team of experts, such as an estate lawyer and financial advisor.
- Choose trustworthy people to act as your executor, primary agent, and healthcare proxy.
- Create a will that spells out how you want your assets to be distributed and who will become your kids’ legal guardian.
- Consider setting up a trust fund for your heirs to ensure your legacy is protected and your assets bypass probate.
- Organize your financial documents and keep them in a fireproof safe, along with electronic copies. Don’t forget to update them periodically.
5. Meet With A Trusted Financial Advisor
Everyone’s financial situation is unique. And while it’s good to go through all the steps outlined above, you should also meet with a trusted financial advisor to make sure you’ve truly covered all your bases. Our advisors can ensure that you are comfortable with your financial plan and have a good understanding of the strategies in place.
A financial advisor can look over your current financial plan, talk through some of your concerns, and bring a holistic view to protecting your family. At Simon Quick Advisors, we know you’ve worked hard to build your wealth. We welcome the opportunity to help you manage and protect it for decades to come. To get started, call us at 973-525-1000 or email info@simonquickadvisors.com.
About Jack
Jack Mahoney is a vice president and client advisor at Simon Quick and is responsible for providing investment and financial planning advice to high-net-worth individuals and families. He also serves as co-head of the hiring committee, where he oversees the recruitment of new team members at the firm. Jack graduated from Connecticut College in New London, CT, with a bachelor’s degree in international relations and economics and enjoyed being a member of their lacrosse team. He became a CERTIFIED FINANCIAL PLANNER™ practitioner in 2015. He and his wife are residents of Montclair, NJ, where Jack remains involved with the youth lacrosse program. To learn more about Jack, connect with him on LinkedIn.
SOURCES
[3] https://www.policygenius.com/disability-insurance/how-much-does-long-term-disability-insurance-pay/
[4] http://wills-probate.lawyers.com/wills-probate-basics/lawyerscom-wills-and-estate-planning-survey-findings.html
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