Christian Community Networking

 By Dale Philyaw

Everyday money matters.

Everyday! Money matters.

Everyday money! Matters

Everyday money matters!

Everyday money matters?

INSURANCE

No matter where we place the emphasis the statement or question has significance in our lives. I would like for us to engage in a discussion about everyday money matters and how we should approach these issues. This will be an ongoing dialogue so that we can better manage our finances. I hope we can take a personal and business viewpoint as we relate our everyday money matters.

I guess it is best to just dive right in. The first and most important step that you can make in maintaining your financial health is to have health and disability insurance. For many of us these are offered through our jobs. This benefit is fantastic, but when changing jobs know the rules and ensure that you have coverage. If your job offers inadequate coverage you might want to consider additional coverage. After we have taken care of our health and disability insurance needs, the next item that we must address is life insurance.

Life insurance is a must in our financial plan; if anyone depends on your income then you should have life insurance. If you have a spouse, child, parent or other loved one that you support financially then you need life insurance. The types and amounts of coverage range from one extreme to the other.

Employers often offer group life insurance. If you are in good health you can probably get a better deal on your own, but of course if you have a health issue, group coverage may be beneficial. Group insurance simply groups everyone together to set the premium. If you would qualify for better results individually then you are paying too much, if you have medical issues that would cause your premium to be high then you are probably getting a good deal. Remember group life insurance usually goes away with the job, another reason to consider a separate life insurance policy. Let’s take a look and see what choices we have.

I consider term life the most economical, with whole life usually being the most expensive. I recommend term over whole life because it is less expensive. The obvious argument is that term is relative to renting and whole life is relative to buying a home. While this argument has merit, I offer this that whole life is forced savings because a person is unable or unwilling to save on their own. I think that we are all capable of saving the difference between the two types and it is significant!

The saving can be invested and used by you, while you are still alive! Most parents want to make sure the kids are taken care of by the insurance and I admire the concept. If you take out a 30 year term policy your kids will be 30 years older, completed college, and starting their own families, not to mention the mortgage maybe paid off. Each situation is different and you must plan accordingly. I am not against whole life policies, if a parent is healthy and the adult kids have the means to fund the insurance. I think putting a policy on the parent is an outstanding investment for the future wealth of the family. After all, it is the adult kid who will benefit not the dying parent. A parent might just want to provide their children with a financial gift on their death and feel that a whole life policy does just that. There are other types of insurances that fall between term and whole life policies that offer an investment vehicle and provide coverage for the life of the insured, similar to whole life.

There are those who will say that the terminal ill can access money from their insurance policy to help cover medical cost. A true statement, but recall the first step is to have medical and disability insurance. This of course reduces the death benefit; if the difference had been invested then those monies would be available to help.

It is important to mention, that like investing we must be careful not to put all our eggs in one basket. I mean our job, life insurance, health insurance, disability insurance and retirement savings all tied to our job can be dangerous. Plan well! Please provide your thoughts, comments.

Our next topic will tackle retirement planning.