Last week was a week of firsts at the office.  Prime amongst those, was a call from our client Maria, who told us that her son had just been struck by a meteorite the size of a golf ball!   Now, you might be wondering, how did she know it was a meteorite?  Well, it was still hot and smoking, and it fell from the sky!  Based on the pictures she sent me, I’m pretty sure it was a meteorite.

The reason Maria called us was not that Liam was injured – fortunately, Liam was alright, although, needless to stay, a bit surprised!  Instead, she called knowing that I’m a member of the Royal Astronomical Society, and could probably point her towards people that would help preserve the meteorite, and perhaps be interested in some scientific research.  We were happy to do so!

Interestingly, the odds of you being hit by a meteorite have been somewhat calculated – depending on the assumptions, we all have a lifetime chance of somewhere between 1 in 3200 to 1 in 840,000,000…might be time for little Liam to buy a lottery ticket!

The call though, was a good – but unusual – reminder that strange, unexpected things can happen that we probably can’t forsee…and that’s the topic of this month’s newsletter.

Plan for the  unexpected

While its true, you can’t forsee every possible outcome doing financial and estate planning work, there are three main steps you can take to ensure that you plan for unexpected events and emergencies:

  1. Everyone should have an emergency fund!
  2. Your planning work should look at what happens if you or another family member gets sick. This is why Disability and/or Critical Illness insurance are often important parts of your plan during your working years.
  3. Your planning work should take into account what happens if you, or someone close to you were to pass away. This is where Life Insurance is so important – in your working years to replace lost income, and in your later years to offset tax on your estate.

Protecting your kids and grandkids

We live in a society where it can likely be argued that  we have gone overboard in protecting our kids (Listen to  this hilarious Irrelevant Show sketch, for example, which contrasts parenting today  vs the 70’s), I find that way too few financial plans address adequately protecting our kids.

I’m a firm believer that every child should have a life insurance policy placed on them as soon as possible.  While no parent wants to contemplate losing their child, it does happen, but the advantages of having insurance on your kids or grandkids early in life hold true even if they live to a very advanced age.

Any life insurance policy placed on a child should ideally have a “guaranteed insurability rider” that allows them to get more insurance as an adult without having to give medical evidence.  (I’m exceptionally grateful to have had this in place for all of our children, especially given that one of our children has a medical condition which will likely make it hard for him to get insurance as an adult.)   Kids are usually easy an inexpensive to insure – so doing this early cost little, and has a major benefit to their lives later on.

And – from a tax planning point of view – insurance policies owned by you on your child or grandchild  can be passed tax-free to your child or grandchild later in life – allowing you to transfer wealth efficiently from one generation to the next.

Meteorite-proof Financial Safety Helmets

At the end of the day, a rock hurtling at us at 71km/hour from space is such an unlikely event, Liam may be the only person you ever hear of in your lifetime who gets hits by one.  That said, if you stop for a moment and create a list of unexpected and unusual things that have happened to people you know and love , I would imagine that that list is lengthy.    I think it is safe to say that we will all have one or two things in our lives that will hit us or our family out of the blue and have  major impact in our lives.

As astronomers, we wish for clear skies – but we plan for clouds, just in case.