Financial Protection Can Be a Great Valentine’s Day Gift

On Valentine’s Day, you can give your spouse or life partner a traditional gift such as candy or flowers. But once you’ve done that, why not think about something that can provide longer-lasting benefits for your loved one? Specifically, think about ways to provide a lifetime of financial protection.

You can do this in several ways, including:

• Protection while you’re alive—As you know, it’s usually necessary for both partners or spouses to work to maintain a household—so if your income were to disappear, even temporarily, it could present a big problem. Your current employer could offer disability income insurance as an employee benefit, but it might not be enough for your needs, so you may want to consider purchasing your own policy. Keep in mind, though, that disability coverage typically only lasts for a few years, and, in any case, probably won’t completely replace your income.

  Consequently, it’s a good idea to build up your financial resources in other ways, so contribute as much as you can afford to your 401(k) and IRA during your working years. If you do become disabled, it may be possible for you to tap into these funds without incurring a tax penalty, though regular taxes may still be due.

• Protection if you need care—If you were ever to need some type of long-term care, such as an extended stay in a nursing home or the services of a home health care worker, you might find the costs to be considerable—and possibly a severe burden on your spouse or partner. In fact, the average cost for a private room in a nursing home is about $100,000 per year, while a home health aide costs about $50,000 per year, according to Genworth, an insurance company.

  And Medicare typically pays only a small percentage of these expenses. To protect your spouse or partner—not to mention your grown children—from possibly having to deal with these costs, you might consider purchasing long-term care insurance. As an alternative, you could purchase a “hybrid” policy that combines long-term care benefits with those offered by a traditional life insurance policy. So, if you never needed long-term care, your policy would pay a death benefit to your spouse or partner or another beneficiary you’ve named.

• Protection when you’re gone—If you were to pass away, would your spouse or partner have the financial resources to continue the same lifestyle, pay the mortgage or, if you have children, provide for their education? If the answer is no, then you need to maintain adequate life insurance. How much is enough? There’s no one right answer for everyone.

  You might hear that you need a death benefit that’s worth seven or eight times your annual income, but the actual amount should be based on a variety of factors—your age, size of family, current income, spouse or partner’s income, and so on. A financial professional can help you determine the appropriate amount of coverage.

  Valentine’s Day is just one day on the calendar. But if it serves as another reminder of how much you value your spouse or partner and spurs you into action to protect her or him throughout your lifetime—and beyond—then it will be an important day indeed.