Soldier of Finance (19 page)
Read Soldier of Finance Online
Authors: Jeff Rose
I took out a policy when I got married and another when we had our first child. If you are single, it's not as important because you have only yourself to worry about. But if you have a spouse or children, you need to protect them. How much life insurance you should have depends on several factors:
- What kind of lifestyle do you want for your family after you are gone?
- Does your spouse work, and will he/she be able to continue working?
- How much debt do you have?
- What will be your family's insurance needs, especially medical?
- What will be required for your family to keep their house?
- Do you want insurance that will provide a lump sum to cover these expenses or do you want to set up a regular income for them?
The answers to those questions will help you get an idea of how much life insurance you need. Consider the answers and go shopping. The tricky thing about insurance is that you are guessing at what might happen in the future, and those projections are likely to change as time goes by. Getting the amount exactly right isn't the issue; providing protection for your family's security is. Once you have a decent estimate, go with it. You can reevaluate your circumstances every few years and adjust accordingly.
Periodically reviewing your coverage and premium amount is important for the same reason as refinancing your mortgage loan: You may find better rates and be able to renegotiate the policy. I recently used a life insurance quote engine to see how much money I could save if I refinanced. I was surprised to learn I could get $250,000 more coverage for $400 per year less. That's a savings of $12,000 over a period of thirty years! If I invested that into something that paid 7% each year, I would end up much further ahead.
There is one important point to consider if you change your policies: You don't want to lose any coverage during the process. For this reason,
do not cancel your existing policy until you are approved for the new one.
It would be very unfortunate to let one policy lapse and then experience a medical condition that prevented you from either getting the new policy or renewing the old one. In my case, I made the regular premium payment on the policy I already had while awaiting approval for the new one. After the change to the new policy was complete, I canceled the old one and got a refund for a prorated amount of the premium I had paid.
An umbrella policy basically rests on your existing insurance policies for your vehicles and home, providing extra protection in the event of a situation not fully covered by your normal insurance. Umbrella policies cover the gaps left by other coverage. For example, if a friend trips over a garden hose in your yard and sues you for negligence, your umbrella policy would cover you.
All kinds of liabilities can be covered. They are often things that you would not normally think about, but for which you can incur considerable legal responsibility. A few examples demonstrate how important this coverage is:
- Scenario 1:
Suppose you throw a party at your home, serving alcohol, and a minor has a few drinks without your knowing about it. Then he drives home and gets in a wreck. Even though you were not aware of the problem until later, you could be held legally liable for damage or injuries. - Scenario 2:
Perhaps you act as a chaperone for several kids on a field trip to the park and one of them is injured. Even though it was something you could never have foreseen, the parents of the injured child might claim you were intentionally negligent because your kid didn't like their kid. So they sue you for damages. - Scenario 3:
While driving home you accidentally collide with a delivery truck hauling very expensive equipment. - Scenario 4:
Your child borrows a friend's car to run to the store. On the way back, he runs a stop sign and smashes into a mini-van that's carrying a family of four.
You could find yourself in court over any of these incidents. Considering how litigious our culture is, you must protect yourself with the right umbrella policy. These policies usually come in $1 million increments, and I recommend a $1 million policy as a minimum.
As with many financial matters, don't trust the judgment of a salesman. Do your own calculations. Salesmen all have a formula that they apply to everyone; you are an individual with a unique life. Take the time to figure out your own needs. The issue is protection of all the efforts you have put into your financial future.
Go / No Go
Insurance Needs
Have you shopped around for the least expensive auto insurance?
_______ Go     ________ No Go
Do you have an inventory list of your possessions stored in a safe place?
_______ Go     ________ No Go
Do you have medical insurance available through an employer?
_______ Go     ________ No Go
How much money would your family need if you died? Do you have sufficient life insurance to cover that possibility?
_______ Go     ________ No Go
- Insurance is protection against unexpected emergencies beyond what your FRAGO Fund covers.
- There are five types of insurance you cannot do without: auto, homeowners/renters, medical, life, and umbrella liability.
- Auto insurance is required in most states. At the very least you need to have liability. Premiums can be lowered by raising your deductible, as well as by taking advantage of other discounts. Be sure to ask about them.
- Homeowners/renters insurance provides replacement for possessions lost due to disaster or theft. You can choose cash value or a replacement cost policy. Keep up-to-date records of all your possessions stored somewhere other than your home.
- Medical insurance is necessary to cover sickness or injury that might threaten your ability to work. As with other types of insurance, raising your deductible can lower premiums.
- The purpose of life insurance is to provide for your family if you die. Term life insurance is affordable for most people. Insurance policies designed to be an investment are rarely the best investment vehicle available to you.
- Umbrella policies cover a wide variety of liabilities for fluke accidents.
At the beginning of your training here, you completed the Go/No Go: Performance Measure. That initial evaluation gave you a snapshot of your financial life and habits. Now that you are at the end of this book, it's time to see how far you've come. Go back to
Chapter 1
, complete the Performance Measure evaluation again, and compare the results to the first one. I think you'll be pleased.
You are now a Soldier of Finance. You have developed key skills, and you have planned missions and achieved objectives. But this doesn't mean your training is finished. Being a Soldier of Finance is not a course of training that you complete and then leave behind once you pass a test. It is a new beginning. The oath you took was for the rest of your life. Maintaining success requires follow-through in pursuing your lifetime goals as vigorously as you pursued and accomplished your short-term objectives.
Recently I was asked the difference between being a soldier and being a civilian. The distinctive characteristics of a member of the U.S. Army are the same for a Soldier of Finance:
- Discipline:
A Soldier of Finance continues to vigilantly follow his code of conduct for financial success. He is consistent and reliable. He is dependable. - Clear Vision:
A Soldier of Finance is focused, striving to define the bigger picture and pursue his goals with singleness of purpose. - Tested:
A Soldier of Finance has put the principles of money to work and has tested them. He has seen that they work because he has persistently followed them. He has overcome obstacles to his success. - Knowledge:
A Soldier of Finance has an understanding of the tools and weapons available to him for waging his campaign. He has taken the time to learn how to use them and he has applied them to his financial life. - Confidence:
A Soldier of Finance stands with the confidence that comes from training, experience, and comradeship with his Battle Buddies.
In short, a Soldier of Finance has achieved more than just learning a few steps to attain an outcome. He has learned to think, analyze, and plan his life, giving him the confidence to live it with boldness and strength.
Perhaps you think I've overstated the case, but you have to admit, now that you have a grip on your financial life, you do feel a lot better about the future. That's what really counts. Now that you have eliminated your No Go's and replaced them with Go's, the time has come to Go and Conquer.
For a more in-depth review of all the resources below, go to
www.soldieroffinance.com/resources
.
Jeff's Other Sites
Free Credit Report
Free Credit Score
- True Fico Score:
www.myfico.com
Consumer Education Credit Scores
Online Savings
Online Brokerages
Find a Financial Advisor
Free Life Insurance Quote
The index that appeared in the print version of this title does not match the pages in your eBook. Please use the search function on your eReading device to search for terms of interest. For your reference, the terms that appear in the print index are listed below.
accomplishment, sense of
advice on investing
After Action Report (AAR)
American Dream
American Express
ammunition, for targeting debt
annual fee, for secured card
attitude, for success
auto insurance
automatic payments
bad habits
Baghdad
Baker, Adam
bankruptcy
on credit report
Bargaineering
Basic Training
Battle Buddy
trust in
blame shifting
Blue Falcon
body armor
Brightwork Partners
brokerage firms
budgeting
family battle drills
to goals
identifying unnecessary spending
online resources
practicing
sensitive items report
Burton, Steve
car insurance
car payments
cash flow
cash value policy
CD laddering
CDs
Certificate of Deposit Index, and mortgage rate
Certified Financial Planner (CFP)
Certified Financial Planner Board of Standards
charitable contributions
church contributions
commitment
Common Training Tasks
competition, by credit card companies
confidence
consequences of decisions
consumer debt
consumer loans, investing directly in
contingency plan
credit, absence of
credit accounts, and mortgage
credit cards
as cash imposter
company dirty tricks
debt
errors on limits
getting the most from
limiting number
credit checks, impact on credit score
credit information, impact of
credit report
bankruptcy on
disputing errors
obtaining
verifying information
credit score
finding
and mortgage
obtaining
creed, for soldier of finance
death benefits, insurance for
debt
avoiding contentment with
credit card
level of
measurement
paying down
unnecessary
debt load
debt reduction, vs. investing
Debt Situation Report
Debt Tsunami
deception
decisions, consequences of
deductibles
department stores, credit cards from
discipline
discounts, for insurance
Discover
dividends
drill sergeants
duplicate entry, on credit report
economic collapse of
education
emergencies
emotional impact, of debt
employer match program, for (k) plans
enemies, hidden weaknesses
Equifax
Experian
failure
Fair Isaac Corporation
family battle drills
fear of unknown
fee-based advisors
FICO score
Fidelity Investments
field artillery
fighting, reasons for
financial professionals, selecting for advice
financial status
financial stress
financial struggles
reasons for
FINRA (Financial Industry Regulatory Authority)
fixed rate mortgages
Forrest, Nathan Bedford
(k) plans
for military personnel
FRAGO Fund (Financial Reserve and Goal Fund)
gas companies, credit cards from
generosity
goals
budgeting to
code name for
Op Orders for
reviewing
setbacks
Go/No Go Test
Battle Drill
credit repair checklist
credit report check
credit score
emergency preparation
enlistment checklist
home ownership
insurance needs
long-term investments
performance measure
preparing for investing
short-term and middle-distance investments
targeting debt
home, risk of losing
home equity lines of credit (HEâLOCs)
home ownership
loan types
traps to avoid
what is affordable
homeowners insurance
honesty
hospitalization, insurance and
hybrid mortgages
idle cards
IET Soldier's Handbook
ignorance
information
insurance
auto
discounts for
homeowners
investing as
liability
life
medical
renters
interest rates
for credit cards
credit score and
and debt payoff
for savings accounts
intimidation
inventory, of possessions
investing
advice on
excuses preventing
for future
guideline for
as insurance
investment accounts
job loss
Kiplinger's
magazine
knowledge
lending, peer-to-peer
Lending Club
liability insurance
umbrella
life insurance
life-cycle fund
lifestyle, changes to
lifetime goals
liquid investments
living expenses, savings to cover
Lombardi, Vince
MasterCard
mathematical formula, for targeting debt
measuring debt
SIT Report
medical bills
medical insurance
military personnel
(k) plan for
Soldier's Handbook
minefield
mission
reviewing
specificity for
mission objectives
defining
modified adjusted gross income (MAGI), for Roth IRA limitation
momentum increase, for targeting debt
Money, J.
money, time value of
money market account
vs. stocks
monthly debt payments, vs. income
mortgages
credit score and
loan types
motherhood, debt pay-down
National Association of Personal Financial Advisors
neighborhood
net income, total housing costs as percentage
nursing care
oath
operation budget
Operation Orders (Op Orders)
pawnshops
payday loans
paying down debt
paying off debt
payment structure, for financial advisors
peer-to-peer lending
planning
portfolio, diversifying
positive cash flow
possessions, inventory of
prime rate, and mortgage rate
priorities
prioritizing debts
PX Rangers
Ramsey, Dave
real estate market, 2008 collapse
record keeping, on expenses
renters insurance
repairing credit
replacement cost policy
reports
After Action Report (AAR)
SALUTE format for
sensitive items report
SIT Report
Spot Report (SPOTREP)
see also
credit report
resources
responsibility
retirement savings
growth
risks, in stock market
roster number
Roth IRA
Rowe Price (T.)
SALUTE format for report
savings accounts
making the most of
Scottrade
secured credit card
self-discipline
sensitive items report
short-term goals
short-term savings
SIT Report
situation analysis
situation report
soldier of finance
characteristics
creed
defining
enlistment checklist
Soldier's Handbook
spending
identifying unnecessary
tracking and recording
Spot Report (SPOTREP)
stock market
stock portfolio, diversifying
student loans
success, attitude for
success story
support for others
Tabata method, for targeting debt
tactical budgeting
target-date mutual fund
taxes
term insurance
threats to plan
time value, of money
timeline, for mission
Tirone, Philip
tithing
TransUnion
T.Rowe Price
trust, in Battle Buddy
TSP (Thrift Savings Plan)
umbrella liability
Under Armour
unknown, fear of
unnecessary debt
unnecessary spending, identifying
U.S. Public Interest Research Group (PIRG)
utilization ratio
Vanguard
variable rate mortgages
Visa
vision
von Moltke, Helmuth
Wang, Jim
Warrior Skills