While under quarantine and practicing social distancing these past few weeks, I’ve attended several webinars with topics from managing social media during a crisis to fundamental financial and legal concepts. One thing I found interesting is that the words “unprecedented” and “new normal” are THE most used words across the board, whether it’s spoken or text, paid advertisements or off-handed tweets. We get it. This is a totally unprecedented time and we’re all adjusting to the new normal, but let’s get on to the important things.
Unsurprisingly, amidst this COVID-19 pandemic, there is a lot of concern around the security of our health and finance. Unfortunately, it takes a drastic situation like this for most people to start thinking about this topic -- being reactive instead of the preferred proactive. But regardless, kudos to those thinking about these things sooner than later. I wanted to take some time and break down some basics about these fundamental health and finance topics -- including health insurance, estate planning, and life insurance. Don’t worry, I’ll go into more depth in future writings and I’ll try to keep the information easy to follow and connect it back to me, an almost-24-year-old, and why I think knowing about how to protect yourself starting at as young of an age as possible is SO important.
Let’s start with health insurance. Of the 3 topics, this is probably the most familiar one. For the most part, having health insurance is mandatory in the United States so everyone should have one form or another. You often choose a plan just to choose something and you forget what the real benefits are until you actually need to use your health insurance. I’m talking about like, if you stay healthy, mentally and physically, you’re probably not visiting the doctor or making trips to the hospital frequently except for that annual checkup. BUT once something happens - whatever it may be - and you really need that health insurance plan to work for you, that’s when you truly realize if you made a good or poor choice.
Most people may be covered through their employer, their parents (until they reach the age of 26), or the government, and that’s great! Good for you for having some form of health insurance. But regardless of how you’re covered, do you really understand how you’re covered?
Think about the coverage, how much do you have to pay out of pocket until insurance kicks in?
Does your plan cover long term care (don’t worry we’ll get more into that later)?
Does your illness, accident, etc. automatically get covered or do you have to qualify before insurance helps out?
What about medical expenses -- not just the visit to the hospital or check-ups -- but are you taking prescription medicine that has to be refilled regularly? How much does that cost?
Just some food for thought…
Onto estate planning. Did you know that “wills” is one of the top searches during COVID-19? Again, it takes most people to endure a crisis to push them into learning more about or setting up a will. In the most recent webinar I attended, the professional estate planner mentioned that most people’s biggest investment is buying a house. However, most people fail to locate their grand deed, which is like the receipt for buying the house. And if you can’t find your receipt for one of the biggest investments of your life, then it’s likely that most of your other important financial papers are lost too. So take this time to get organized.
In the event of an emergency, you’ll be so thankful you took the time to organize all your important documents. The earlier you start organizing, the easier it will be for you later on. Take a look at me, I’m 23 years old, still living at home. I have a full time job and have several monthly payments, but that’s nothing compared to my mom who is 63 years old, a homeowner, full-time doctor, part-time financial adviser, countless bills to take care of, etcetera, etcetera. You see what I mean? If I start organizing my documents and setting up a will now, when I have less responsibilities and assets, the easier it will be to find an organization system that works for me. So that once I accumulate more assets in the future, I’ll already have my system in place and I can easily update my will accordingly.
Something else to think about...If you’re suddenly rendered incapacitated or disabled, have you ensured you have someone in place that can speak on your behalf or sign important documents for you? There’s several important documents that you can put into place to make sure you stay represented whether through your detailed written wishes or give someone the power to speak and represent you. These documents include, but aren’t limited to:
Healthcare Directive: Designates someone to make medical decisions for you, opens communication between family and doctors
Power of Attorney: Designates someone to sign legal documents for you in the event that you cannot (you don’t have to be sick, you can just be unavailable)
Living Will: Specifies medical services and hospice care, including but not limited to desired/undesired treatments and authorized visitors
Last Will: Specifies all wishes in writing including but not limited to how your assets should be distributed, how you wish your burial/cremation to be handled, gifts to family/friends. If you do not have a will in place, the state/court will take over and decide for you. This will cost a lot of time, money, and effort on your family/friends behalf and the state/court’s decision may not reflect your wishes.
All of these documents must be done properly, legally, and in advance of need.
Let’s put this into perspective of COVID-19… let’s say I contract the coronavirus. Once I’m checked into the hospital, I’m completely isolated. My friends and family aren’t allowed to visit due to the risk of exposure. If I didn’t have any legal documentation in place, my family would have no input in medical decisions on my behalf, my car payments may stop, no one would have access to my bank accounts to adjust payments or withdraw money to help pay for my hospital stay, etc.
I know talking about death, funerals, and final expenses is a touchy and not to mention grim subject, but it’s SUCH an important one. Because once you die, your body doesn’t disappear and your assets and liabilities don’t just vanish. Someone will have to take care of you and make decisions for you -- deciding who that will be, what will happen, and who will pay, are all tough decisions that will be even more amplified in the event of your death. It would be so helpful to have your decisions already made and details already in place so that your family and friends don’t have to deal with payments/decisions while also dealing with mourning and shock of your death. Funerals and burials cost $7,000 or more and those payments are almost always made up front, and in full.
Bringing this idea back to COVID-19, now let’s say my mom contracted the virus and ended up passing away. I know she has all of these documents in order because she’s shared them with me and I am her designated representative in a few of them. So in the event that my mom passes, our family knows who’s in charge to execute the decisions, but we don’t actually have to make any tough decisions because my mom had already made them before she passed. Because she set everything in place proactively, her family and friends can mourn without any additional financial or emotional stress.
And onto the last necessity, life insurance. More often than not, people completely disregard the importance of life insurance. But you only have this 1 life to live, so it only makes sense to protect it. And COVID-19 has put an urgency for people to have a life insurance policy in place.
There are so many reasons to own life insurance, but I’ll have a future post (or posts) discussing it in more depth. For now, let’s just put it into COVID-19 perspective. Life insurance can help pay off debts and mortgages, it can replace a lost income, pay for funeral and burial expenses, pay for long term care expenses, create a source of tax free retirement income, and pay estate taxes. Life insurance has LIVING benefits, not just the death benefits that most people think about. Use those living benefits, take advantage and use the insurance policy money instead of your own money.
No one knows when you or a loved one may need life insurance, but having it gives you peace of mind that in the event something happens, things are covered. And there’s no time like the present to start learning about life insurance and to insure your life. You’ll never be younger or healthier than you are right in this second. The older and unhealthier you get, the price of life insurance will increase. What if you become insurable between now and when you finally decide to get life insurance? I wouldn’t want to gamble my life like that, wishing I insured my life earlier when I was younger and healthier, which is why I have 2 policies in place today.
How much do you think your life is worth? Most people buy phone insurance on a new phone, but is it a financial essential to insure your phone? A phone may be only worth $1,000, but people don’t even question insuring it...but they’re hesitant to insure their own lives. Think about that.
If you do a quick search on GoFundMe, there’s over 3 million listings raising money just for funerals. We never know when tragedy will strike, but we should be as prepared for it as we can, when we can. Those millions of families raising money to pay for funeral and burial expenses is a grim look into society’s lack of preparation for facing life’s toughest situations. Don’t burden yourself or your loved ones with additional emotional and financial stress by not planning for your future. Let’s not become a victim of the next crisis, and start planning now.
As a postface, I’d like to include that I am a certified health insurance agent for Medi-Cal/Covered California. I am also a licensed health and life insurance agent. If you’re interested in learning more about or even purchasing any of these types of products, please contact me! I’d be more than happy to converse and possibly recommend a professional that can walk you through setting any of these items up.
I hope to do more posts like these in the future. I’m learning all of this for myself and I love to share what I’ve learned in the hope that it can help anyone else
Em Truong
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