Prior to this evening, I was a tad skeptical about financial planners. My reasoning was, what are they going to tell me that I don't already know myself? As it turns out, we did learn some stuff that we didn't already know. For instance:
- Life insurance has a 2-year period of contestibility. Life insurance purchasers can be audited at any time during the 2-year period, but after that period, your premiums can never change. However, if you want to increase coverage on your term life insurance, you have to go through another medical exam/underwriting process.
- In the event of personal bankruptcy, 401(k) accounts cannot be taken by creditors. IRAs, on the other hand, are technically on the table.
I think the more important information that we took from the meeting was the confirmation that we are on the right track. The advisor says that we're in very good shape for our age and have planned well. Nevertheless, we did leave with a checklist of tasks to accomplish.
- Check our long-term disability insurance for any unusual or unexpected restrictions. For example, some LTD plans don't cover mental health issues.
- Check with family and friends to find an estate-planning lawyer. We both need wills.
- Check that our auto and home insurance have more than the minimum liability coverage.
- Open up Roth IRAs--one for each of us.
We're saving for our next home, and he recommended that we consider saving 1/2 to 2/3 of the funds in CDs and the remaining funds in balanced mutual funds, which have stock, bond, and cash holdings. The idea of putting our next down payment into a fund that involves any risk is terrifying to me, so I'm not sure if I'm ready for that action. But we'll see.
After spending only an hour with an advisor, I feel more confident in our decisions and in our situation, and I think that everyone, no matter what is going on in their lives financially, would benefit from obtaining a third-party opinion.
