It's important to make good your financial plan

Financial planning is imperative for the financial health of an individual – and it is the many individuals that make up the nation. Despite careful planning sometimes untoward things happen, that play havoc with the personal budget.

Rick Kahler is a financial planner based in Rapid City. He said, “The main question here is really, ‘what has changed in my life that may change items in my financial plan?’ A person may need more or less insurance, update their estimate planning, switch investment philosophy, save more or less for retirement.”

One should be adequately insured. It is important to evaluate the costs of owning homes, renting and automobile insurance policies whether half yearly or yearly. By increasing deductibles one can bring down the premiums. Costs can be lowered further by choosing an umbrella policy that allows for extra liability coverage commented Steve Podnos, another financial planner from Merritt Island in Florida.

For this one has to bring down the liability covering all the other policies to the lowest point as required by the umbrella policy. After that this umbrella policy should be used to pick the difference. This is of most importance for those having teenagers.

Podnos said, “As kids turn 16 and begin driving, the family liability skyrockets. Anybody of any means should probably have an umbrella policy. It’s the cheapest coverage you can get in terms of millions of dollars of coverage per premium dollar.”

The next attention should be given to insurance covering disability and life insurance. Is it sufficient or is it in excess? The usual rule is that it should be 20 times the salary in the case of life insurance (either for one of both the spouses) after subtracting any other resources one may have. If one is nearing the retirement years one might think of dropping some or all coverage (disability, life insurance) exchanging it for long-term care policies.

Podnos further explained, “Once you hit your 60s disability insurance is expensive.” At this stage one is paying for a coverage that will take into account only a couple of years more. Most polices stop coverage when one is 65 or soon after it.

Another point to mull over is making estate plan changes. One should ensure the beneficiaries mentioned are current. One also needs to think over again the persons named as the guardians, trustees, and executors as well as those with powers of attorney.

All this will go a long way in making life smooth for the individual and consequently the nation.

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