Protect Your Wealth Like Nobody's Business...

On Halloween, The Money Matters Club met to talk about life, some of its scary unknowns, and how to protect yourself against such risks and uncertainties. These are the minutes from our lunch-and-learn meeting on Tuesday, October 31, 2023, at Noon Pacific.

First, some empowerment! You may think, phew, reading all this feels like too much, or that you need a professional to handle all this for you, but trust me, even if you delegate this stuff, no one will ever care more about your money than you will yourself--YOU got this! If you get through this post, I believe in your ability to also take the reins and put in place your own peace of mind plans. Don't procrastinate. Time may be of the essence.

I held last Tuesday's meeting and wrote this up for all you hardworking peeps and Club Friends who just need some encouragement and a kick-start to shaping your wealth protection strategy. You can do it! Trust in yourself.

It's not to say putting a pro on your team isn't helpful, it's to say only YOU can decide what protections make the right sense for you, your assets, and your family the best.

I brought in my trusted friend and insurance pro with me to the meeting to cover the innerworkings of several of the various insurance protection products we discussed in the meeting. I want to thank Steve Carlson, Carlson Agency Insurance Services, Inc. (steve@carlson-agency.com, (916) 439-1306, www.carlson-agency.com) for his support during this Club's session last week to cover the specifics and answer your great questions, Club Friends!

The business of insurance is about spreading the risk. It's not possible to be profitable if you are in the insurance industry and don't do a good job of that. Let's keep that in mind as we navigate these topics...

Here we go...

I broke the hour-long discussion down into three stages of protective steps you might want to take in 1) everyday life; 2) in the eventual event some unexpected things may harm us across our life's span, but not necessarily end us; and 3) in prepping for the ultimate passage we will all will meet one day when we are no longer on earth directly protecting our assets and our loved ones and family.

...On a daily basis...

Everyday life steps we can take are as important as the longer-term strategic steps. Not managed, they can lead to greater harm. In everyday life, I explained to our meeting goers, YOU are your own Chief Information Security Officer, Chief Privacy Officer, and Chief Financial Officer. Welcome to the C-Suite!

Now, I often take some flak from my friends for practicing an abundance of caution on social media, shredding every label, receipt, or paper with my PI on it (PI=Personal Information in this context), and keeping a low profile whenever I could.

Your personal security and privacy protection steps should make the right sense for you of course. It all starts with you understanding what it takes to protect your data, your private information, and your money and assets from the bad actors out there in the world and your understanding, if not acceptance, of the fact that no one is immune from these types of threats. They're often random but they may as well sometimes become targeted personally to you. So, to help you, we discussed this short list of easy-to-action steps you can take to boost your security up several notches on a daily basis. They are:

• Practice good password hygiene. I love having you picture a narwhal whenever choosing passwords. Not a mythical creature, a narwhal is an actual Arctic whale to admire for its length, strength, and uniqueness. Make your passwords like narwhals.
  

• Add two-factor or multi-factor authentication to your financial accounts/any digital footprints in your life. Too many people get lazy with passwords, re-using the same easy-to-remember one again and again. If one falls, they'll all fall because the hackers will try it out in a snap on all the rest of your accounts they attempt to access to loot all of your assets in seconds. Multi-factor, even a single second factor, used to authenticate/validate that the person using your password is really you, adds another strong layer of defense to passwords that may become compromised. Take the extra time to ensure your money and digital life are as secure as they can be.
  

• Manage your digital attack surface by keeping your digital life as small as you can or only as large as you can manage sufficiently. Avoid getting socially engineered, where bad actors can surmise a lot about you because you've left so many clues in the wild, in the wide open, and all over the Internet, where your actual name, location, and attributes about who you are and what you like are available for consumption and piecing together out on open public spaces that are findable in seconds by anyone.
  

• Be careful about logging into your digital life's spaces on multiples of shared devices without permanently deleting those saved logins' credentials from those devices where the next user can compromise these digital breadcrumbs and see your digital life exposed for the taking. Never share your credentials (log in info). Shield your keys as you enter log in info too from any nearby prying eyes or 'shoulder surfers.'
  

• Never take the bait waiting for you in text messages, DMs, emails, phone calls, even in your United States Postal Service mailbox. Scammers are paid to wake up every day and see what kind of loot they can amass by scamming us out of our hard-earned money. Typically, they'll take the easiest paths to the loot. Just like we put up motion-detecting lights, cameras, gates, guard dog signs, and home security system signals and stickers on our homes to deter robbers, we need to do this in our digital life too to deter scammers and hackers. Their tactics can look pretty darn real because it takes them only seconds to create pretty undetectable spoofs (copies or creations of very real-looking messages sent to consumers by people or parties they already trust or have brand recognition of but which contain malicious links or harmful executable code. Artificial Intelligence, as promising as it boasts, can and does get used for harm too. Even voices can be impersonated or spoofed. Be vigilant to question these touch points scammers may try to make with you. We may be a target no matter what we do, but informed targets who've mitigated vulnerabilities and can't easily be fooled aren't good ones. Make yourself a hard to hit target.

Three more things you can do right now to actively/proactively protect yourself:

1. Consider Identity Theft Protection benefits. The reason I say consider, is because you may not feel they're necessary for you if you are already lock-tight and have trepidation about giving away too many keys to your kingdom to yet another third party who themselves may be breached as they're managing your personal information for you. While that risk is low, it's not no-risk. So, consider this option, and the levels of protection offered to you, carefully, balancing how much you have to turn over, pay, and trust in exchange for these benefits. If you're sold, manage this manager copiously. Also, check to see if you have this benefit through your workplace and if you can leverage employer discounts, trial periods, etc., for less.
   

2. Keep an eye on your exposure. Use burner emails for non-critical stuff. Keep a low digital footprint or small attack surface. Don't travel with more digital data than you need on your person. Keep them turned off for max security. You can use https://haveibeenpwned.com to see whether any of your email addresses have ever been compromised/exposed through breaches and if so, you can change them, manage these account profiles accordingly by changing emails, passwords, and adding another authentication factor/layer to them as needed.
   

3. You can lock down your Social Security Numbers (you can do this for your kiddos too, and tell the others, especially your parents and grandparents). Visit these sites to consider doing a lock down/verification measure of protection so no one else can pose as you with creditors or employers without first being met with a block and tackle! You will have more work to do to unfreeze and re-freeze each time you need to use your SSN, but I have always found that a worthwhile tradeoff to keep peace of mind. Just me?

   • https://www.usa.gov/credit-freeze

   • https://e-verify.gov/employees

There's so much more to read here on this post! I hope you'll keep reading. Are you still with me? If so, thank you, and please put into the comments, "Nice tips!" There you spotted the Easter Egg! Or add on even more tips below in the comments just to help me and your fellow Club Friends out with even more ways we can keep our lives, money, and family safe and sound.

...While the journey of life is happening...

Now, at this point in our live meeting we discussed what more you can do in the event there ever are some unforeseen events that keep you from earning but help you protect against wage income losses. You'll recover from these types of events, but while you're down or impaired how can you prevent a catastrophic loss that leaves you in horrible debt or even unhoused. These are the kinds of things that happen just when you least expect, such as a major car accident, other accidents, falls, injuries, or disabling temporary or long-term illnesses too. We are all pretty resilient but not superhuman. These topics we discussed are good to consider so life's unexpected scares don't devastate us financially:

• Understand how much Short-Term Disability insurance you have at work (in at least five states including California, you are defaulted into it as a state mandate but check for sure at your employer and for your state). If you were temporarily disabled with, say two broken hands from catching yourself in a bad fall, and couldn't work, what sort of benefit would kick in to help you compensate for your lost wages while you recovered? Knowing this and your coverage proactively is key to proper planning for the unexpected, so your life's savings doesn't get drained paying for your monthly bills while you're out of work recovering--instead your disability insurance kicks in to save the day. Don't be caught without it!
  

• You, like me, aren't immune from a longer-term disability. Are you afforded Long-Term Disability Insurance at work? Is there a supplemental opt-in plan you may want to add to your elections? Many of these types of additional coverages are available to anyone within their first 30 days on-the-job, or at annual enrollment, or at any time of year. Just inquire with your employer directly if you can't pull the info yourself from an online and accessible employee benefits handbook. When you find it, look for other plan types such as Critical Care Insurance, Long Term Care Insurance, and more!
  

• Be careful you aren't loading up on payroll deduction hits to your take-home pay for the sake of it. It is possible to find yourself over insured. LONG SIDEBAR NOTICE: When I was the only worker in my home/family, my partner was the stay-at-home parent while our children were younger, I loaded up on some of these protections at work via my paycheck, because during that phase of our lives I needed the peace of mind we'd be protected if something bad ever happened to me. If my husband would have to go back to work, not be able to stay home to take care of me and our kids anymore, or say if something that would be so horrible as to put me in a nursing care home even if he could go back to work, and we couldn't afford that, then what? Nursing care homes aren't just for 100-year-olds, they're for anyone who can't adequately be cared for at home at any age by non-professional medical staff. But you have to consider the risk/reward equation. For example, during the pandemic, I wasn't driving into work anymore. Working from home lowers your risk of a catastrophic car accident happening. You need to think like your own actuary or risk assessor and decide for yourself, your spouse, and your kids and then add these levels of insurance appropriately, while keeping enough of your take-home pay intact to afford your expenses and savings budget. If you have so much surplus pay or a very large accessible emergency fund in your possession, you can do what's called "self-insure" meaning you don't load up on these protections because you have enough money to live on if these events were to ever hinder your ability to work. People with no fallback funds need to consider these risks and protections so that they don't put themselves into a situation to never recover or to become unhoused in insurmountable debt. Saving up in an emergency fund helps you not have to spend away pockets of money on these types of payroll deductions at work that eat away at your net take-home pay rate or savings rate. Emergency funds are powerful because you keep them liquid, keep them working for you (in say high-yield savings accounts), and keep them at-the-ready to help you avoid massive debt or losing your lifestyle if something accidental happens. The time to think of these scenarios is not on the stretcher being wheeled into a long-term care or nursing facility.

• We all must consider auto and home policies too. Or maybe auto and renters' insurance if you don't own a home yet. I imagine there's not a lot more that needs to be said here for most of you readers. So, for reminder's sake, just know that not all auto and home/renters' insurance products are built the same way. Carve 30 minutes out of a day to take the time to re-read what your policy says it will do for you. Are there any exclusions/limitations that concern you as you scenario ponder? Are there any unique stipulations or situations you need to address? Has your situation changed? Number of drivers you are covering changed? Are you still insuring a new, top-of-the-line set of wheels that have actually aged and dropped significantly in replaceable value? Do you not drive as many miles anymore now that your commute was reduced? Do you only need permissive use for would-be ad hoc drivers that may use your car? Or do you have dependents at home driving cars on the regular? Are they out of state for college? When it comes to home insurance, ask these questions: Have you increased the value of your home significantly? Do you have something very valuable inside to add to the policy to ensure gets protected/replaced in a fire? And so on. Review your coverage, ensure you know what's covered, what's vulnerable, and adjust to not overpay but not underinsure either.
  

• Consider Umbrella insurance. We talked about how this additional layer of protection can come bundled with auto and home policies for expanded coverage often for a lower or more competitive overall cost than you'd pay individually by not bundling. Umbrella insurance can pick up where your auto or home policies leave off so that if you're liable for something, your home or other assets aren't on the line to cover your liability or exposure. SHORT SIDEBAR: Those of you in Virginia and New Hampshire have a different conversation going on; you aren't mandated to carry auto insurance. But would still be liable for any damages you ever caused (with an auto or not). Maybe carrying at least an Umbrella policy would help you, if you didn't have large stores of money available to pay for your liability out of pocket. Our guest, Steve Carlson, had us ponder an estimate he once heard, where over 95% of all claims that involve an Umbrella policy are settled for less than $1M. And $1M is a typical minimum anyway.
  

• Consider having legal documents accessible for temporary needs, incapacities, etc. Your legal Trust, Power of Attorney, and Health Care Directive docs can all help you out as well if you're ever in a situation of incapacitation (hopefully short-lived) where you don't want someone you don't even know making decisions for you, but rather a trusted appointee you set up in advance to act on your behalf and in your best interest, ideally per your instructions you set in writing or in careful disclosures in conversation to them early and often prior to any of these types of situations coming into play. Powers of Attorney and Health Care Directives (even Trusts) can be found in printable templates but are not going to be designed for YOU! Customizing these to any length necessary to provide you peace of mind that ample instruction has been detailed is necessary to really protect YOU. "You" is in caps, italicized, and underlined to nuance that you are an individual person with unique beliefs, needs, wishes, family structures, dynamics, and so forth. Templates can't know or comprehensively protect who YOU are. Start with a template and customize the heck out of it. Actual lawyers can help but many of them are using their own tried and true templates without actually helping you think about what YOU specifically may need. That's up to you. I'll add you also have to be your own best attorney too. Look at your resume now!

Guest speaker Steve Carlson helped us consider the reasons for why the insurance landscape in California (and not limited to CA) is drastically changing due to various pressures such as weather and conditions. We learned or were reminded of how insurance providers, especially home insurance product providers in California, are not finding it profitable to be here in the state and many are not renewing or are ending contracts and plan on getting out of the state.

The recent past few years with the pandemic, and natural disasters such as floods and fires, combined with California's Insurance Commissioner's policy around rate increase freezes and other consumer protections are making it hard for insurance providers to stay in a state of profitability in California. So those companies that stay can name their price and those that go have nothing they owe you to not renew or drop your coverage. If companies can't sustain by raising rates, their other option is to shut down business. Steve talked about what this means for you and what to consider as you look forward to your coverage options within your budget and for your needs. A lot of debate goes on about who's to blame. But when very large companies do shut down, then the smaller ones do too, not wanting to take on adverse selection burdens. While the 6.9% rate increase max cap was removed, companies do have to prove losses to raise their rates more than that to get back to "neutral" or to "get to a state of "profitable." Once they do that, they'll open up to taking on new policies. Right now, new policies are being capped by these companies to help them manage their books/profitability and ability to stay in business in California.

Navigating this landscape effectively and proactively is key for you to avoid a no coverage scenario and/or sticker shock on what coverage you can still get in the near future. Steve says, as an independent agent, he still has Mercury products available among his offerings, Mercury is one of the major players still open for new policies in California, as well as a few others on the home insurance side maybe lesser known like Bamboo and Grange, and some specialty companies as well. On the captive side, AAA, Liberty Mutual, and Farmers are still possible, (but Farmers, for example, Steve says, is only currently allowing 7k new policies in the whole state to be opened per month, so they run out of new policy availability in the first three days of the month typically, causing consumers in need to have to wait out the month until available supply reopens the next month when they try for a policy again). Most brokers will only have a handful of viable options for you each month to consider.

Steve says pick a trusted insurance broker. Search online for 'independent insurance agent' and then read their public-facing reviews. You have to wear your informed consumer hat. Each one may specialize in various things too and not in others. Find the right fit. Ask around. Lean on the reviews and referrals as a starting point. But, also have a conversation with them before you purchase to see if it feels like a right fit and they seem to have your best interest in mind and then manage them. Also ask yourself how they're compensated and whether they're pushing you toward products for any selfish reasons of their own. Asking for quotes or thoughts from a couple/few agents or brokers is always a good idea, to help you make a really informed decision.

When it comes to insurance you can get some policies right at the office where you work for some needs, but should you only insure through your employer? Or should you look for policies outside of work too? At work can be convenient, say you sign up for an auto or a home policy and can set up payroll deductions and get a nice discount, that may suit you well. If your employer discounted plans aren't competitive and you don't care about payroll deductions, shop around for better terms. And review your terms often to ensure your deal is still the best one for you.

...After you're gone from this earth...

The last category of steps you want to take are those that set up your end-of-life plan.

Parents create birth plans, a carefully thought-out description of exactly how they hope the arrival of each of their new humans will go (hopefully) providing they can maintain control of most of their expectations. These arrival plans are a bit more let's say fun to plan than planning for how we as humans will eventually depart from the earth. Departure plans are as-, if-not-more-, important, because we can't exactly know when our departures will be or exactly how any detail surrounding them will go. You know best how you'd ideally like the inevitable day you do depart to go...

Start by asking yourself exactly what happens to every dollar or every policy you have on the day you are gone for good from your life. How would the dollars you already own pass to your heirs, beneficiaries, loved ones, spouse, kiddos, charities, etc. And how would benefits you'll receive be paid out too? Say life insurance benefits for starters.

You want to be sure these instructions and payouts are known, findable, current, explicit, clear, and coherent. Let me add, legally reviewed, signed, and did I say findable emphatically yet? You want to understand precedence too. Know about when a beneficiary form will or won't supersede a trust document's instructions. Whether you should or shouldn't list a Trust as a beneficiary on a beneficiary form. What happens if you completed no beneficiary forms and don't either have a Trust. You want to understand taxation, when a beneficiary will or won't be subject to a taxable event to receive your assets/benefits/payouts. And so on. You want to understand what value will pay out of a policy too and if there are any exclusions. I'd give you these answers right here if I could, but they vary for every person's own situation and whether or not heirs are spouses, or someone else like a child, friend, or charitable organization. Timing, age, size of estate, all matter too. It's best to follow the logic for your own if, then, else scenarios unique to your family structure to know what the best plans to lay in place would be for you.

While free life insurance coverage through an employer (or as part of any other partner agreement you may be entitled to by holding say a credit card, renting a car, or being a member of an organization, etc.), can be great when it comes to life insurance for sure, alone this free stuff may not be sufficient for you to feel your beneficiaries will be well protected. Free coverage like these often comes without taking any actions up front. You may enjoy up to x% of your salary, for example, (my former employer gave us a standard 200% of our annual pay, or 2x, for free without us even needing to sign up for it). Get what you can for free out there, of course, and understand what the payout would mean and if you need to supplement it to add even more. These free coverages shouldn't be your only means for life insurance you will ever need to consider though. There are life insurance calculators you can use online to help you estimate your total life insurance needs on an evolving basis.

Consider that many of the policies you partake in at the office ride (depend) on your continuous employment at that office. They may be more easily accessible, conveniently available, cheaper or free, waive evidence of insurability (EOI) steps especially during onboarding, and become portable once you leave employment at that employer. Portability just means they'll let you keep the policy, just not likely at the same group rate you were enjoying. To port an employer's group plan to your own policy, you'll have to be quoted your own new premium after you're out on your own to receive the same coverage. So, you'll want to strongly consider locking in a term life insurance premium rate of your own finding that doesn't ride on continuous employment with any specified employer, that you can afford to carry on outside of your employer plan and all while you're primed to be insurable/lower risk (so when you're likely to be younger and healthier). This way, when you've ultimately left your employer, you will be covered on a plan of your own making/independent terms too. If your only means to covering life insurance is by porting an employer's group policy but at a much costlier individual rate perhaps when you're older and maybe not as healthy or as lower risk anymore, your options become limited and more expensive.

Consider along the way if ever you are becoming "over insured" meaning you are outlaying a lot of money for coverage you don't need. For example, if your children are well beyond being dependent on you for their lifestyle and very livelihood, then you may not need a million-dollar life insurance policy in place to protect or benefit them should you pass away prematurely, paying hundreds of dollars every billing term to keep such a policy in place is just eating away at your savings and investment potential and your ultimate bottom line that you're likely depending on to live out your days comfortably. If it's affordable enough and you find it to be a cheap way to leave some kind of legacy you wouldn't be able to leave otherwise, then weigh that into your strat too.

In sum, we discussed a lot of steps you can take daily, some mid-term steps to take while you live your life, and some longer-term steps to put in place proactively for when you ultimately leave the living. How you want to be remembered is personal. Don't let it be for forgetting to fill out your beneficiary forms, not paying your insurance premiums, not having insurance in place, and not thinking about protecting your heirs from financial ruin, excessive and unnecessary taxation, and other disappointing letdowns that may surface if you're caught not having properly planned your end-of-life wishes.

Ultimately, we discussed how you are your own best Chief Information Security Officer, Data Privacy Officer, Chief Financial Officer, and not to mention you're essentially your own best risk manager too. What a resume/CV!

The approach you take to your own risk levels depends on you. Risk must be first measured for likelihood and cost or weight of impact, and then treated accordingly. Will you mitigate the risk to reduce or eliminate it if possible, will you accept the risk as-is, or will you hedge in some way with compensating controls or ways to compensate yourself and restore to normal should the risks occur and cause impact. Will you do this on your own or purchase any products to help you insure? All of this is up to you. Not taking steps to mitigate or avoid risk impacts proactively can totally sink your wealth building potential or greatly diminish your net worth unexpectedly and possibly unrecoverably (she says to herself, is that even a word? It should be).

Remember, you can do all this! This Club is here to help empower you along the way.

Thank you for reading this far! And join me in thanking our guest speaker, Steve Carlson.

Did you miss the Easter Egg several scrolls above? If so, you may have also missed some good wealth protection tips I hope you don't miss that are findable in these text-heavy paragraphs throughout my post designed to be helpful for you hard working Club Friends.

Make a list of the steps you'll take before the year is out and put these solid action steps in play to build your wealth protection strat and your peace of mind.

Have any additional considerations or tips to share with your fellow Club Friends? Please post them in the comments and help strengthen this community.

Didn't learn one new thing? Wow, you're awesome! Please share your knowledge and tell the others about what you know! :) When everyone is protected, then we all do better.

Thank you for reading. Look at you go! You're taking control of building your financial muscles so well! Financial resilience looks so good on you! Continue to follow us / subscribe at TheMoneyMattersClub.com!

Because your money matters,

el*

*not an expert, just care

PS - I want a chance to thank you for helping me correct any typos. Send me a note if you found any mistakes please and thank you! :)

PSS- yes, I recorded this live Club session for those who registered, but the recording is not yet edited or posted anywhere just yet (I'm a constant work in progress!), hope this recap will suffice for now. Appreciate your patience, Club Friends! :)

---

E.M.Powers ("el") is a regular person with no particular financial credentials or expertise who happens to be a money enthusiast and the founder of The Money Matters Club, a virtual watercooler for like-minded individuals with a thirst for building their own financial health. Since 2006, she's helped thousands of co-workers build their financial literacy and wealth by participating in The Money Matters Club, a community she built on her employer's internal network. Since 2023, she's been attempting to scale The Club's reach through its second home on the World Wide Web. Her opinions--as well as the opinions of all participants--are just that: opinions, which are subject to flawed logic, math, typos, and correction. She keeps a growth mindset and is also always learning something new or bolstering her own understanding after discussions at The Club. All information shared is done so with the best intent to inspire and empower others to learn more about money considerations toward building their own financial muscles. Nothing shared is meant as individualized advice that anyone should act on without doing their own curious research and personal decision making. There are no dumb questions at The Money Matters Club. Your financial health and literacy are what this Club cares about. All investing involves risk. All results can and will vary.

Copyright: ©The Money Matters Club, all rights reserved (2023).