It’s that time of year when we pay respects to the dearly departed, and for some, it is also a reminder of our own mortality.
Did you know that while living expenses are costly, dying can be just as expensive if not more so? A friend was telling me that the widow of a former co-worker approached them for help when he passed on unexpectedly. The widow is a housewife and she is crying that she needs to raise as much as P200,000 to be able to put her husband to rest. That’s a lot of money that many of us do not have set aside to pay for life’s emergencies.
While we do not want to think of the time when we will pass on, one of the best things we can do for our family is make it easier when the time does come. Here are some simple tasks you can do during the holidays this week.
#1 Organize family documents in one place
Birth certificates are usually asked for almost every transaction – opening a bank account, starting a new school or a new job, filing claims, and many more. I would suggest keeping a copy of all birth certificates of family members in one easy-to-access place, and make it known to everyone where to find them. A marriage certificate is another commonly asked document so best to also keep it handy.
#2 Track all insurance policies and file copies
Family members usually have their own life insurance policies, and maybe there are other coverage that are also useful to know. Do you own bank accounts that offer free life insurance? Track that too. Does your company give you group insurance cover? List that as well. It’s good to keep track of amount of cover, any caveats (like accident only), and length of cover (in case it is a term insurance). The more information in your tracker, the more useful it will be.
#3 Check that insurance policies are updated.
Now that you have the policies all sorted out, time to read the fine print. Check the beneficiaries listed. Do you need to add or remove any names? Does it still list your old residence? And previous contact numbers? It’s important to let your insurer know changes in your contact details as well as any changes you wish to make for your listed beneficiaries.
#4 Are you insured enough?
And now for another important question – are you insured enough? Maybe you bought your policy when you were single, and the coverage was enough at that time. But then you got married, had kids, and did not have the time to buy a new policy, or add to your coverage.
While there is no set formula for how much insurance you need, most financial experts argue you need to at least have 50% of your annual income. If you are the primary breadwinner, this means your family will have six months’ worth of your earnings to help them get back on their feet. Meanwhile, insurance companies will argue a reasonable amount for life insurance is at least 10 times your annual salary. Between the two extremes, find the math that works for you.
#5 Share your financial information, if you’re comfortable
In my many years working for a bank, I have found that some couples do keep their money secrets. It could be something like a credit card or maybe a bank account or even investments. But keeping your family in the dark will make it harder for them to make claims or recover these funds if the unexpected happens. So take time to sit down and decide what can be shared, and what will stay with you.
#6 Digitize copies when you can
From your family documents to insurance policies, I recommend making digital copies which you can share with everyone. This way, you each have easy access, and the truth is, many do not require the original copies anymore. Keep the digital copies in a secure place, or a digital folder only your family can access. Fraudsters are always trying to steal personal information so don’t make it easy for them.
#7 Improve your family’s financial literacy
Maybe the most important thing you can do is to find ways for your family to become better money managers. We know IQ is important to get ahead in life. EQ too, but FIN-Q or high financial quotient is one of the best legacies you can leave behind. If your spouse or your kids are financially literate, their money smarts will keep them housed and fed.
You can teach them with little things like making planned purchases, checking prices to get the best deals, using promotions and vouchers, to big things like saving and investing. Make it a weekly or monthly learning session, and you will all come out of it with happier wallets.
Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.