what to do [if] bread-winner dies [insurance question]

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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what to do [if] bread-winner dies [insurance question]

Post by Rosco » Fri Mar 15, 2013 1:09 pm

Hi! Just trying to get all my wills, investments, insurance stuff tied up and am all set at vanguard after leaving the mutual fund store. I make about 43k and my wife stays home with our kids: 5,3,1. I have 750k in term insurance and after getting rid of my universal life policy, I'm worried that if I die my insurance provider might suggest an "ideal" investment to secure her future that is less than ideal. She is a homemaker and I'd like to advise her or help set up a plan in such a way that she could continue to stay home with the kids, especially in the years after I die. We live on about 33k per year now, but she would need housing after I die. But I suggested in our discussions she not leap into a new house with the insurance. Please help with any ideas how she can turn the insurance payout into an income stream so that along with my vanguard portfolio papers and will stuff I don't leave her and my kids at the mercy of an insurance salesman. SS

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Re: what to do when bread-winner dies

Post by Boglenaut » Fri Mar 15, 2013 1:15 pm

I was really afraid to click on this thread. Glad to see you are just planning ahead! :D

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Re: what to do when bread-winner dies

Post by hlfo718 » Fri Mar 15, 2013 1:16 pm

Why don't you help her understand investing now by introducing her to this site as well as having her read some of the books? You can then discuss how she can invest the lump sum if you do go before her.

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Re: what to do when bread-winner dies

Post by 2stepsbehind » Fri Mar 15, 2013 1:18 pm

Obviously the best way is to have her become intimately involved in the finances now. Have her take the reins every other month or so. Discuss your investment strategy etc.

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Re: what to do when bread-winner dies

Post by DualIncomeNoDebt » Fri Mar 15, 2013 1:21 pm

Search the forums, you are going to find scores of posts about analogous topics. For example, how to simplify Vanguard retirement accounts so if the more knowledgeable spouse passes, the investment accounts are on autopilot. Similarly, lots of posts on what to do when we get older and faculties start to degrade, how to avoid becoming fraud victim, simplifying accounts, three-fund portfolios, even single-fund Vanguard target-date retirement fund portfolios, etc. Lots of material on this topic that should help you.

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Re: what to do when bread-winner dies

Post by kitteh » Fri Mar 15, 2013 1:54 pm

Be sure you also have a healthcare power of attorney and if that isn't sufficient, a living will.

As others have said, there's no substitute for having her involved, or at least watching, what you do financially now and her understanding why you do what you do. Also be sure she knows where all your accounts are and their passwords. I would also pay bills together so she knows what to expect there.

\update: With kids that young, so you need an insurance policy on your wife, to provide childcare?

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Re: what to do [if] bread-winner dies [insurance question]

Post by sport » Fri Mar 15, 2013 3:11 pm

You mentioned that you bought your Vanguard shares at the Mutual Fund Store. Do they charge for their services? If so, is it a one time charge, or are there ongoing fees? If there are any fees, you should be aware that you can open a mutual fund account directly at Vanguard at no charge and with no fees other than the fund expense ratio that everyone pays. The only extra requirement for no fees is that electronic statements must be used instead of paper, unless your balance is high enough.


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Re: what to do [if] bread-winner dies

Post by Rosco » Fri Mar 15, 2013 4:58 pm

The mutual fund store had me in everything. They charged 1.5%. I moved over to vanguard so I could use their funds exclusively without the fees. I do have insurance for my wife to help with child care in the event of her death. I couldn't afford to pay someone what she's worth! Good advice on involving her. She has so much on her hands with three boys, but we need to share more in that respect.
I was wondering specifically about annuities vs. funds like Target retirement income. She would have about 750k to draw a revenue stream depending on where she moved and what she'd do as it relates to housing which we'll talk about. Some of that uncertainty is that where we are isn't really home or near home for either of us so a move would be involved if I died. Thanks for your thoughtfulness and great ideas and pointers! SS
I didn't title the post as an insurance question... I guess it is in that the insurance pay out will become her income source... more a question of how best to take care of her and the kids when I am not there to do it.
Last edited by Rosco on Fri Mar 15, 2013 5:03 pm, edited 2 times in total.

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Re: what to do [if] bread-winner dies [insurance question]

Post by bsteiner » Fri Mar 15, 2013 4:59 pm

Name the credit shelter trust under your Will as the beneficiary of the insurance. Name someone you're confident will do what's appropriate, or a bank or trust company, as a trustee. If appropriate, she can be a trustee as well.

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