How to Prepare for Your Children’s Future
It is never too early, or too late, to start getting things ready for your children’s futures. There are a number of different things you can do, in fact you’re probably already doing several of them without even thinking about it. The biggest mistake many parents make in preparing for their children’s futures is in only considering the financial aspects and not paying enough attention to other practical concerns. Naturally,many of us don’t like to dwell on potential worst casescenarios, but it is perfectly healthy, desirable in fact, to occasionally ensure that we are prepared for unexpected death or injury and that our children in particular will be taken care of without us. Below are some of the most overlooked steps we can take to protect our children’s futures.
Write a Will
Writing a will is something many people understandably put off until they are quite old, often when their children are already fully grown adults. This can compound the tragedy of an unexpected death as without a will there is often a degree of legal wrangling required on behalf of the surviving family members, and of course the deceased parent has no way of controlling what they leave or how it is divided amongst their kin.
Letter of Intent
Similar to a will, a letter of intent is a document which outlines your wishes as a parent regarding your children’s care if both parents are unable to look after them. It is never too early to discuss these plans with your family and to formulate a plan with them. This will give you peace of mind while minimizing, as much as one can, the difficult aftermath of an unexpected death.
Insurance comes in many forms, and exactly what insurance policies you pursue will depend largely on your individual circumstances. Here is a quick guide to the most common forms of insurance and why they are important:
- Life Insurance; Life insurance, as the name suggests, is an insurance policy that pays out when the named individual dies. There are three types of life insurance:term, whole life, and universal. Term life insurance, sometimes known as pure life insurance, pays out if the named individual dies within a specified time range, but if the individual does not die there is no return of premiums to the policy holder. Whole life insurance has no restrictions on time and applies as long as premiums are paid; these policies generally offer a lower rate of return and are inflexible when it comes to the cost of premiums. Universal coverage offers flexible rates and lifetime coverage, however if interest rates decline, the pay-out may shrink and similarly the premiums may rise.
- Property Insurance; Property insurance can come in a couple of different forms. There are policies to protect against specific types of damage, such as fire or flooding, as well as general policies that cover your property against damage and or theft. Which one is appropriate for you will depend on where you live and what kinds of hazard you are likely to encounter.
- ‘Bad faith insurance’ refers to an insurers unwillingness to pay out on a legitimate claim. These decisions can be challenged in court, but you will need to employ the services of a lawyer you can trust. You can specify who you wish to handle your legal affairs in the event of your death so it is worth finding a lawyer and discussing your plans with them. If you can, you could also leave some money with them as a down payment for future services.
Preparing for your children’s futures can feel a little morbid and will require you to consider scenarios you would rather not think about. However, it is more than worth it to give you and your family peace of mind and to mitigate the disruption a sudden death will have on them.