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A Basic Financial Planning Primer

You need to ask yourself three basic questions: What happens if I die too soon, live too long or become disabled? These are very practical questions, the answers to which need to be thoughtfully considered.

If you die too soon, you should consider life insurance. There are two reasons to buy life insurance, - because you need to or you want to. You need to buy life insurance if there is someone or some organization to which you owe money, e.g. mortgage holder, bank loan, credit card company, etc. You want life insurance if you want to help a spouse, offspring, support your college, fund a trust, etc.

If you live too long, you need to save and invest. In addition, you need to consider long term care insurance. Long term care is, after all, the greatest threat to your retirement.

Finally, during your working years, you need to protect your greatest asset, your ability to earn a decent living. The protection comes from having appropriate disability insurance. If you think you don’t need this coverage, ask yourself the length of your usual annual vacation. Imagine going that long without income. Then, imagine yourself without an income for six months, a year or permanently. Disability insurance helps to pay your mortgage, feed your family and heat your home.

If you are comfortable with your answers to these three questions, you may be financially secure. If some discomfort remains, see Ed Auble.