“The best offense starts with a good defense.”
Have you ever heard that clich before? This may certainly be true in football or any sport – the best offense really does start with a good defense. But while having a great defense is easy to understand in sports, how does it relate to your financial life?
Here are three unlikely heroes I have found in my 24 years of financial planning that some clients, even though financially savvy, seem to repeatedly miss. All of them are defensive moves that are not popular or widely discussed, yet relevant:
Umbrella Liability Policy – What is it? It is a comprehensive policy, subject to limits of course, that covers the liability of unintentionally caused harm or damage to another person’s self or property. Let’s put it this way. If you have a two-car collision that is your fault, the first question the insurance company or attorney representing the other party is going to ask is: “Do you have car insurance?” The second question is likely: “Do you have an Umbrella Policy?” Why? If you have it, there is a buffer between your assets and what they can sue you for, which they likely will. If you don’t have an Umbrella Policy, your assets ARE the buffer. I have heard horror stories, but I have been fortunate to never have had a client that actually suffered through it. Best thing about this type of coverage? It is cheap compared to the risk.
Travel Insurance – Yes, that’s right. I said it. That gimmicky policy that travel agents or credit cards try to sell you? You think it never pays off? Think again. Case in point and true story: My best friend travels to Cancun this July to spend vacation time with his wife and child. While body-surfing in the waves with his son, he gets tumbled over by a wave and lands on his spine, breaking his C-4 and C-5 Vertebrae. Tragedy? Yes, it could have happened to any of us. Silver lining? My friend always believed in travel insurance when traveling outside the country. Moral of the story: His travel insurance company acted as a concierge during the entire surgery process, and completely paid for his airlift from Cancun back to Vanderbilt in Nashville. Without question. Imagine the cost of a private jet to fly you and you wife from Cancun to Nashville. It’s not a discount fare. I love the old clich, “You get what you pay for.” That is, as long as you PAID for it. If interested, you can follow his story on Facebook @PrayingforGreg.
AD&D Insurance – What is it? AD&D stands for Accidental Death and Dismemberment Insurance. Usually a policy sold to people that travel a lot. Fair enough. Accidental death is easily described, as is dismemberment. However, as I would learn from my friend’s accident, some policies have a clause that say if you lose the use of your arms and legs (paraplegic, quadriplegic, etc.), you qualify for an exception to the policy. Who knew? The people who read the full policy, that’s who. My friend was one of them and the first one to suggest I call the company. Very forward thinking, in hindsight.
Although urgency moves us to action, wouldn’t it be so much better to have fail-safes in place before the need arises? When the unexpected happens, find assurance in having the additional help this kind of financial planning provides.
Look into it. It’s worth the time.
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