Death, divorce and critical illness are not natural topics of conversation when you're pouring the gravy over the chicken or hiding the over-boiled sprouts in your napkin.
But for Wade Seward, head of distribution strategy at Haven Life, having the family all in one place at this time of year is a great opportunity to discuss important matters that might affect one's financial and physical health.
He explains to FTAdviser In Focus why it is important that all the family are brought into the conversation about the financial implications of the unexpected, and why professional financial advisers are so crucial to facilitating these kinds of discussions.
FTAdviser: Why do people seem to get ‘surprised’ by big life changes such as divorce or ill health?
Wade Seward: While many people look forward to major life changes like buying a house or having a child, most don’t prepare for some of life’s not so nice surprises.
For many, thinking about things like divorce or ill health can be stressful or anxiety inducing. In turn, it makes sense that when a diagnosis is made or a couple separates, that many are left unprepared to contend with the financial implications.
FTA: If we have to expect the unexpected all the time, does this mean our plans have to change all the time?
WS: Preparing for the unexpected is one of the primary reasons people should proactively think about their long-term financial plans. The good news is that, with a solid long-term financial plan in place, individuals can rest assured that they are largely financially protected against the unexpected.
Consider the case of term life insurance. Term life insurance is designed to provide peace of mind to policyholders should they unexpectedly pass during the policy’s term.
Should the policyholder pass away during the term’s policy, their lump-sum, tax-free death benefit can help their beneficiaries cover mortgage costs, tuition fees, or pretty much any other expense.
FTA: Do people have to keep getting advisers to help change their plans to cope with unexpected events?
WS: Major life events such as a divorce, death of a loved one or birth of a child might prompt an individual to tinker around the edges of their term life policy, including possibly changing the designated beneficiary.
But individuals don’t have to change their foundational plans for every curveball life throws their way.
Of course, the option to do so always exists if the policyholder wants to. In other words, it is a “can do,” not a “must do".
FTA: What sort of golden rules of thumb should advisers and their clients consider when setting out on a financial plan?
When it comes to life insurance, financial advisers often suggest having coverage of five to 10 times the policyholder’s annual salary.