BOSTON (CBS) - This is the CYA part of your financial plan. Step 5. Cover Your Assets!
You've worked very hard to realize your goals and accumulate assets. Now you need to protect them. A well diversified portfolio with an asset allocation mix to meet your goals is your best defense in the stock market.
And as part of your financial plan you will need to be sure you are adequately insured and have an estate plan as well so you can protect those you love as well as your assets.
Insurance allows you to protect your home, car, health, ability to work and even your life. Insurance provides protection against a major loss that you couldn't cover with your emergency fund. So you pay a premium, the price of the insurance, to protect yourself and those you love.
The insurance company pools all of the policyholders' money and takes out expenses and salaries but must leave a reserve in its kitty so when something does happen there is money to cover the claims. Since Katrina, we are all more aware of insurance companies delaying or not paying out claims. Check your insurance company's rating.
As part of your planning, review all of your insurance policies to be sure you are adequately insured. If you have small children, you need a lot of life insurance. There are many calculators on the internet to help you figure out if you have enough life insurance. You use life insurance to replace the loss of your income for your dependents if you should die.
Health insurance is a must have. Massachusetts requires that have you insurance so they make it a no choice decision. Review what you have.
Estate Planning: this is the very last piece of the puzzle. And the one most people never get around to doing. Estate planning allows you to control from the grave. Can't get better than that!
A will tells the world how you would like your assets distributed upon your death. If you don't have a will and many people don't, the laws of the state where you reside dictate how your assets are distributed.
In Massachusetts, if you are single it will go to your parents, but what if you have a partner you want to protect. If you are married with children, half goes to your spouse and half goes to the children even if they are tiny. Make the effort to finish your financial plan by getting your estate planning done.
At the minimum you need to have a will, a Durable Power of Attorney and a Health Care Proxy.
To find a financial planner to help you achieve your goals and dreams in your area contact the FPA, the Financial Planning Association's local Boston chapter or their national website. Check out the free events the Financial Planning Association of Massachusetts has planned.
To find a planner to help contact:
National Association of Personal Financial Advisors (NAPFA)
3250 North Arlington Heights Road,
Arlington Heights, IL 60004
(NAPFA has a membership of fee-only planners. Membership: 1,100+)
Garrett Planning Network
12700 Johnson Drive
Shawnee, KS 66216
A network of fee-only financial planners willing to work with consumers on an hourly, as needed basis. This is new organization with only a small number of planners.
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