Life Insurance Needs Analysis App

This is the sixth exercise in a series designed to walk you through an entire financial plan.  The exercise is embedded in an Excel spreadsheet you can download and save for personal use.  You can find the backdrop for the exercise HERE or just jump right in with the instructions given below:

This app is designed to help you determine what your life insurance needs are for final expenses, debts and mortgages, education, and income replacement.  If you conclude that you have policies you don’t need or want, and you’ve confirmed your research with an independent planner who does not accept commissions on the sale of life insurance, then you should have several options for terminating your policies.  These will differ from policy-to-policy, so check with your insurer.  But don’t make those decisions hastily.  Even if you shouldn’t have purchased the whole life insurance policy you bought 15 years ago and don’t need or want it now, in some instances it will make sense to keep it.

Requesting an “In-force Life Insurance Illustration” and a “Policy Cost Basis Report” from your agent (or the insurance company’s home office) will help you and your independent planner determine whether the policy should be kept or surrendered based on the investment value, future prospects for growth, stability of the insurer and tax consequences of liquidating.

Additionally, if you are considering replacing a current policy with a new policy that is more appropriate or economical, it is very important that you do NOT cancel any existing policies until you have received and paid for the new policy.  This is to ensure that no issues arise throughout the course of your underwriting that would disqualify you from receiving the new insurance policy.

Especially in these economic times, it is important to ensure that every dollar of yours is working hard for you, and that includes the dollars channeled toward life insurance.

Click HERE to access the app!

Risk Management Matrix App

This is the fifth exercise in a series designed to walk you through an entire financial plan.  The exercise is embedded in an Excel spreadsheet you can download and save for personal use.  You can find the backdrop for the exercise HERE or just jump right in with the instructions given below:

The best way to see activities through a risk management lens is to go through some ideas of your own, like the example of my car accident, and discuss or jot down the ways in which that risk could have been managed with each of the four methods.  It doesn’t have to be something as dramatic or painful.  It could easily be a risk management success story that you can now better understand.

Examine both the personal and the financial risk using all four of the risk management techniques.  After doing that exercise, discipline yourself to analyze a few other examples throughout the course of your days.  If you’re bold enough, teach the technique to a friend or family member (there’s no better way to learn something than to teach it).  Eventually, it won’t be work, and you’ll see your options more clearly.  Then, when you examine your existing insurance products or new offerings, look for ways you can reasonably avoid, reduce, or assume the risk before paying someone else to do it for you.

Click HERE to access the app!

The Economic Bias of Home and Auto Insurance Agents

Most of the time, we expect those in the financial sales realm to sell us MORE of something than we may need, because the more they sell, the more money they make, right?  But in one very interesting example—home and auto insurance agents—they may actually have an Economic Bias to sell us LESS than we need.  Please take 90 seconds to learn why:

Financial Planning for Fathers

Tm1  I’ve learned more about life in the last 6 years than in the previous 28 combined.  It was 6 years ago when I became a father, and I now have two incredible boys—Kieran and Connor—who’ve likely taught me more than I them.  Parenting is a glorious challenge that tests every area of our lives—our marriage, family, and friendships, as well as our productivity, creativity and often times our mental stability!  Financially, being a father is… expensive.  And for those dads who have a tendency to evaluate financial expenditures as a “return on investment,” the return on investment in our children presents a confounding dilemma.  After all, the expense is cold hard cash and the return is nebulous and may not be realized for decades.  

In the end, we dads must relinquish our desire for tangible benefits of parenting and pour our life (and often
Tm2   times, our money) into these little ones, unconditionally.  It is through this sacrifice that we begin to realize that the real benefits of parenting have nothing to do with dollars and cents, but instead intangible blessings and unexplainable joy.  And who wouldn’t trade that—dollars for lasting joy?  Fathering, then, turns out to be an incredible investment after all!

Practically, here are four financial planning areas that every dad needs to address:

Will – Most of us dads think that we’re generally indestructible, but the truth is that the one thing we can be sure of in life is that we will eventually… die.  That inevitability requires us to have a will.  And especially for fathers of young children, the most important financial planning recommendation in your world is to acquire or update a will—most importantly, to stipulate who your children’s legal guardian will be in the case of your untimely demise. 

Life Insurance – The one thing that many dislike almost as much as the thought of their own death is the notion of talking to a life insurance agent.  But the truth remains that if we would be leaving behind a spouse and children who are at least partly reliant on our very existence for our portion of the household, we need some life insurance.  The vast majority of us will ably fulfill our life insurance needs with TERM life insurance.

Education Planning – As dads, we’re not legally or ethically bound to pay for our children’s college education, but if that is something that we’ve pledged to do, we should save for it so that it doesn’t wipe us out once our kids start graduating from high school.  Consider saving 50% of your expected college expenses in a 529 college investment savings plan.

Work/Life Balance – Dads tend to put a lot of weight into our role to “provide and protect” in our households, but if we’re to be honest, we’d acknowledge that we occasionally abdicate ourselves from other roles and duties in the household.  Simply put, our kids grow up fast, and if we make them feel like our work is the most important thing in the world, they’ll quite naturally conclude that they aren’t.  Adults understand the difference between the quality of time and the quantity—but for kids, it’s often just about the quantity!

I had an opportunity to share these same thoughts with viewers of WBAL-TV (NBC) in Baltimore yesterday – Father's Day.  If you want to view the video simply click HERE or click the image!

TM - WBAL - June 20, 2010