(Smart) Planning for the Unexpected

A story recently in the Seattle Times tells the story of Cathy Berk and the sudden death of her husband Dave. Dave was 60 years old and expected to work for at least another five years. Cathy also worked, but the death of her husband reduced their combined income by 70%.

Cathy and her husband had tried to invest for their future, but that future did not include his sudden death.

They had accumulated cash and retirement accounts equal to approximately two years of their combined income. Cathy has $21,400 of medical bills which were not covered by Dave’s health insurance and a $133,000 mortgage on her $500,000 home.

Does this sound like there may have been a need for life insurance? Dave did have a small policy which provides Cathy with an annuity of $2,046 per month for 10 years. In today’s market, this equates to a life insurance policy with a death benefit of around $200,000, or one-and-a-half years of Dave’s income.

Using the LIFE’s life insurance needs calculator, and plugging in the data above including Dave’s lost income for five years, showed the amount of life insurance was almost right on target, but this is only because Cathy had advice from a qualified financial professional in reviewing her finances. This professional advisor, upon a close examination of the family finances, revealed some additional investments which Cathy will use to supplement her income.

This points out how important it is for consumers to work with professional advisers to pinpoint their needs and plan for the unexpected. The resources of the LIFE Foundation can be very valuable in educating and creating awareness with your clients to plan properly.