While working at a bank in the summer of 2006 I got to see first hand what a person with newly inherited money without proper education can do with money. My first week on the job there was a woman for the purpose of this writing we can call her “Mrs. Pam” she came into the branch made a deposit and I saw she had well over $200,000 in her checking account. I had no clue how this woman got this money I just knew something seemed off. She didn’t carry herself like someone that earned the type of income that could amass this much money in a checking account. As the weeks went on I saw Mrs. Pam come into the branch almost every other day making some type of withdrawal or ordering some type of Official Check. Her money dwindled by the day.
One day Mrs. Pam came in with her children and they sat and ordered 5 separate official checks for huge sums. They were planning a family reunion that was going to be funded totally by Mrs. Pam. This reunion ended up costing Mrs. Pam well over $60,000. Her funds were pretty much gone. I remember coming into the branch one day and saw her account at $17,000 I almost panicked. I then went deeper into her account and saw that before I started at the branch Mrs. Pam’s average monthly Non-Sufficient Funds was at 3 per month. She was heading right back to ground zero. I then asked a coworker what happened and the person said Mrs. Pam’s mother left her the money. This came as no surprise to me as it all made perfect sense now.
Needless to say in the next two months Mrs. Pam was right back at her negative balance habits and it got so bad she had to close the account because she didn’t have enough to cover her last NSF fee buildup. I could see the lack of control Mrs. Pam had the lack of awareness on what to properly do with the money. At the time I didn’t have the education but now I see her mistakes and empathize with her for doing what she thought was best.
Education and holding each other accountable with that education is key. Had Mrs. Pam’s Mother told her “Pam I want to make sure you get this, I want you to study financial literacy and come up with a plan for what you will do with your inheritance” This story would have been totally different. The only thing missing from Mrs. Pam story is a conversation and an education. An inheritance without a solid conversation is a setup for disaster.
The purposes of Life Insurance through your job is for an employer to be able to offer its employee’s life insurance coverage. Some people get it mixed up thinking it will last for their entire life, but it does not. This policy will only last you as long as you work for the organization that you work for and the cost of it will go up over the time you are there. Most Life Insurance policies through your job stay the same from age 18-40, and once you reach the age 40, it goes up every five years. However, when you get to age 65-75, it gets astronomical to the point where you’re forced to drop it. In most cases like for the Federal Government for example after the age of 65 not all the coverage goes away just 75% goes away. This is not a problem if you are working the job or you die while you are working it ends up being a good thing, the issue arises when you think this is all the coverage you have, and it will last for the rest of your life. On average more than 95% of people die in retirement and not during their working years. So, while Life Insurance through your job is cool, it’s always good to get other insurance coverage outside of it.
You can make anyone your beneficiary for your Insurance through your job. You can have as many beneficiaries as you want, you just have to make sure that it all adds up to 100 percent.
Your kids can be riders on your Insurance through your job. Typically an Insurance Policy through your job will cover your kids into the age of 25 in some cases 22 years old. You just need to be cognizant of the fact that this policy will not last your children’s entire life but there are other policies out there that can do that. These policies are however pretty decent when it comes to taking care of your young children in case of your untimely death. Main thing to know is it won’t last your entire life but your kids can be covered as well as your spouse. Also, for yourself when your Insurance Policy through your job expires, it will also expire on your children and spouse as well.
Life insurance through your job as long as your beneficiaries are set up properly will pay out immediately. Once your family sends the insurance company the death certificate they will send the money; there is no waiting period. There are some policies where you have to be alive for one year, two years or three years and in some case, four years before the policy will pay out in its totality. With a Life Insurance coverage through your job there is no waiting period in most cases, there maybe one or two out there but I am not aware of any. Life Insurance policy through your job is designed to pay out the full death benefit once the person that the policy is designated for passes away. Hence you don’t have to worry about that waiting period as it pays out right away in the full amount.