Ruthann looked in the rear-view mirror to see why her two children had suddenly gone silent. Just a few minutes ago, her five-year-old twins in the back seat had been arguing about which one had run faster at their school’s sports day. Their quarrelling had taken its toll; they were now fast asleep.

Thankful for the brief respite, Ruthann smiled as she reminisced on her children’s antics. Despite their hyperactivity, they both performed well at school and she was proud of their achievements. She looked forward to seeing them become accomplished adults in the future.

As she daydreamed about the years to come, Ruthann’s brow grew furrowed as the familiar fears crept through her mind. She often worried about what would happen to her kids if something untoward happened to her. Once again, she was gripped by an overwhelming sense of panic.

Although it was over three years ago, Ruthann vividly remembered receiving the shocking news of her husband’s death. He had been involved in a traffic accident on the highway and had died instantly. It had been traumatic to deal with his sudden passing and to cope with two young children single-handedly.

Unfortunately, her husband had departed leaving behind many money challenges. He had operated a struggling small business, the title to the family home was still tied up in his mother’s estate, and there was little cash on hand to deal with funeral expenses and recurrent bills.

With the financial assistance of her parents, she managed to get past the worst; but Ruthann was still barely able to make ends meet on her civil servant’s salary. There was so much that she wanted her children to have, but it was hard to find extra funds to plan for their future.

Providing after your passing

Last week, we discussed the importance of making preparations for your passing. Ensuring that your property and assets can be efficiently distributed according to your wishes after you have died is definitely a financial objective that you should make your priority.

This is essential if you have dependents who would be financially disadvantaged if you were no longer around. Once you own any form of property that would be in limbo when you die, then you need to have a plan of action to ensure that it can be smoothly transferred upon your passing.

Taking care of the present

Given the economic realities that face us in this country, it can sometimes be difficult to make financially responsible decisions, despite our best intentions. In Ruthann’s case, although she wanted more for her children’s future, she just didn’t have the means to act on her wishes.

If it’s challenging to pay your expenses right now, then you may find it almost impossible to put aside enough money for goals such as home ownership, college tuition and retirement income. The prospect of amassing wealth to leave behind a sizeable legacy would also seem unlikely.

Insuring your life

Although it may be challenging to prepare for future events when you’re struggling with current costs, it doesn’t remove your obligation to make plans for your passing. One way to provide your survivors with money even if you don’t have any assets is to purchase insurance on your life.

Life insurance is a contract between the insuring company and the owner of the insurance policy. The insurer agrees to pay out a lump sum if the insured person dies within the policy terms, while the policy owner promises to make regular premium payments to keep it in force.

Supplying money when it’s needed

There are many benefits to having life insurance. Once your policy has named beneficiaries, the death benefit will automatically be paid to these persons when you pass on. This can provide immediate funds to your survivors to cover funeral costs, medical bills and other expenses.

If you have property that is solely owned, you can buy life insurance specifically to pay the fees associated with the transfer of your assets. This will prevent your survivors from having to sell your legacy to cover these costs. Beneficiaries also don’t have to pay tax on insurance proceeds.

Protecting your loved ones

It’s important to note that an insurance policy with a stated beneficiary does not form part of your estate that needs to be transferred. While your will can possibly be contested in a court of law by dissenting family members, your beneficiary’s right to the policy proceeds cannot be disputed.

Your untimely death could disrupt the financial goals that you had been pursuing for your family’s future. By purchasing adequate insurance on your life, your survivors would still be able to realise these dreams even though you are not physically around to continue saving and investing.

If you admit that your financial situation is unstable and you’re worried about what would happen to your survivors if you died unexpectedly, then you should speak to an insurance advisor who could guide you on the appropriate actions to take to protect and provide for your loved ones.

Copyright © 2013 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, October 31, 2013

DON’T MISS MY NEXT ARTICLE! CLICK BELOW TO RECEIVE IT IN YOUR EMAIL:

Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl