There's nothing fun about the "d-words"—death and disability. In fact, just the mention of those words makes us want to turn our heads because we can't—and here's another d-word—deal. We don't want to tempt fate. So, instead of dealing, we neglect making out a will or medical directive and avoid getting the life and disability insurance we need.
But I have news for you. Thinking about negative life events won't make them happen. And preparing for the future won't tempt fate—it will protect
you and your loved ones from fate. What's more, doing nothing can result in some pretty dire consequences.
So, in an effort to be fully prepared, here's a rundown of what you need to do today to make sure your family's future is secure:
- A will. This is the document that specifies how you want your possessions distributed in the event of your death. It is also the only way to name guardians for minor children. An astounding three-fourths of Americans don't have wills. If you don't have a will and you and your spouse die at the same time, decisions on how your assets are distributed and, more importantly, who will raise your children, will most likely be left up to some judge who has never met you. That's not the way you want things to go.
- A living will and healthcare proxy. A living will is a document that tells doctors and hospitals what kind of action you want taken in a dire situation. It essentially answers the question, "Do you want life support?" A healthcare proxy is a document that gives the person you choose the authority to make medical decisions on your behalf. This person is critical because healthcare issues aren't always black and white. In a pinch, doctors and hospitals will rely on the word of your proxy over your living will.
- Life and disability insurance. Life insurance pays a predetermined amount to your beneficiary when you die. If you have others depending on your income or services (like taking care of the kids or an elderly parent), you need life insurance, too. Anyone who needs life insurance also needs disability insurance. This policy will pay you if you're unable to work. You can usually get short-term disability insurance through your employer. But long-term coverage is the more pressing need. About one-third of people ages 30 to 65 will be forced out of work for three months or more by a disability, according to the Health Insurance Association of America.
In addition, if you're in your 50s and have assets between $300,000 and $2 million, long-term care insurance probably makes sense for you. These policies cover nursing home and assisted living costs, but they are costly. For more information on long-term care insurance, go to www.aarp.org.