How do you plan for future illnesses or tragedies? The "what ifs" of life are all too real, so get your financial plans in place ahead of time.
Life Insurance is extremely important if you have young children who depend on your income. A recent Time article, titled "When Tragedy Strikes a Young Family," suggests a 20- to 30-year level term policy as a good start to help support your family through the children’s school years. Another often overlooked part of this type of planning is Disability Insurance. As many people have discovered, being unable to go to work due to an injury or sickness can be more financially catastrophic than death. Expenses typically increase with treatment and recovery, but your income stops. A disability policy either through your employer or through a private insurer can be a real wise move and offers a good deal of protection—it provides a portion of your income while you are unable to work.
The original article also suggests that you keep an Emergency Fund. This is a readily accessible amount of cash allows you to pay for unexpected financial demands, such as the waiting period before the benefits on a disability insurance policy commence. Finally, Wills, Living Wills, and Powers of Attorney are a must if you have young children. This is because if both you and your spouse die within a short time of each other, your children will inherit the proceeds of life insurance, investments, and other savings. Young children (and any child under age 18) need to have a guardian appointed to look after them and their finances. Your estate planning attorney can assist you with designating this person in your will. A living will lets you describe your end-of-life choices, and powers of attorney will authorize another to act on your behalf if you are disabled or incapacitated.
An individual with a long-term illness has so many things to think about—eliminate the financial planning and take care of it now, so that in the event this situation arises, you have the ability to concentrate on your health.
Reference: Time (August 27, 2014) "When Tragedy Strikes a Young Family"