The Financial Checklist Plan
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  • Past, Present, Future
  • THE Financial Checklist Plan
  • 1. Personal Reserve Fund
  • 2. Eliminate Personal Debt
  • 3. Insuring We're Properly Insured
  • 4. Saving for Retirement and College
  • 5. Paying Off Cars and Homes
  • 6. Building Wealth and Giving and Living Graciously
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Financial Checklist Plan Part 3:
Insuring We're Properly Insured

The Financial Checklist Plan: Insurance Checklist

Insurance You Need

Health Insurance
Term Life Insurance
Auto Insurance
Homeowner's Insurance / Renter's Insurance
Umbrella Policies
Long Term Disability Insurance
Long Term Care Insurance (if over 59 years old)
Identity Theft Insurance

Insurance You Don't Need

Life Insurance that is not Term Insurance
Disease Care Insurance (Cancer, Heart Attack, etc)
Private Mortgage Insurance
Extended Warranties
Water Line Coverage
Credit Card Insurance
Mortgage Life Insurance
Accidental Death Insurance


Term Life Insurance:

Term Life Insurance is a very important part of your Insurance Checklist.  Your goal is to have purchased enough life insurance to replace lost income in the event of your death (or your spouse's death).  For a person with no real assets and making $50,000 a year, a good rule of thumb is to get 10 times your income in term life insurance.  In this scenario, this would be $500,000 in coverage.  As your wealth grows down the road through the Financial Checklist Plan, lesser life insurance is needed.  For example, given the prior scenario, but now with the person on Baby Step 7 and with $200,000 in investments, instead of purchasing $500,000 of term coverage, now $300,000 could be purchased for the same $500,000 in essential coverage ($200,000 in investments + $300,000 in life insurance = $500,000 available at death).  This savings is realized by the individual now being able to self insure a part of their needed benefit upon their death. 

If you currently have whole life (or variable or other similar insurance), you might want to consider buying an appropriate amount of term life insurance, and when the new term life insurance policy is secured canceling the whole life policies and accepting the cash value as proceeds to you.  The rationale is that insurance is a lousy investment means and is only for protecting finances.  Investing should be done separate of insurance.  To reiterate, don't cancel whole life or similar policies until term is completely secured.

For families with stay at home moms or dads, Dave recommends also purchasing term life insurance.  This is to cover the costs associated with providing child care if the stay at home spouse should die.  The rule of thumb is 10 times the cost of yearly child care for your children. 

Life Insurance for children can be perhaps considered, but only in an amount sufficient to cover burial expenses if a child should die.  Consider this coverage if your financial situation is such that burial expenses would be higher than you could afford if this unfortunate situation were to ever occur.  

Next, consider Auto Insurance.



Child Whole Life!

A Little Background

Today's Average Financial Picture
Why Learn the Financial Checklist?
Learning from the Past
Remaking the Present
Owning the Future

The Financial Checklist

Creating a Personal Reserve Fund
Eliminating Personal Debt
Insuring We're Properly Insured
Saving for Retirement and College
Paying Off Cars and Homes
Building Wealth, Giving and Sharing

Checklist Execution

Visioning a Different Future
Committing to Change
Investing Wisely