Six Financial Planning Lessons from a Motorcycle Accident
When you have a close call with serious injury or worse, you start thinking of your family’s—and your—financial well-being.
I had a motorcycle accident several weeks ago. Yes, that is correct! I am typing this with just one hand because my other hand is in a splint. I would have to say that if it wasn’t for my motorcycle clothing and some guardian angels, I might not be here to write this article.
To make a long story short, I was riding on a two-lane highway and this 16-year-old boy in a large SUV who was making a left turn pulled right in front of me and blocked both lanes. I am guessing he just didn’t see me. I am not sure exactly what happened but I am guessing––based on the tears on my motorcycle jacket––that I probably laid down my bike to avoid hitting him and my body was thrown either around or over the top of his vehicle.
Anyway, I remember lying on my back with my arms wide looking up at the beautiful sky through my helmet, wondering if I was dead. I was not scared. In fact, a profound peace had come over me at that time which is hard to explain. I lay there until the ambulance came and after we determined I could move my arms, legs, and neck, they helped me stand up and the crowd that was nearby gave me a nice big cheer!
When we got to the hospital, there was a team of 6-8 doctors and nurses ready to get to work on me. When they found out I was basically fine, they explained to me that whenever they have a motorcycle accident, they have to treat it like trauma and have to do a full body CAT-scan and x-rays to check for broken bones and potentially other internal damage. I was happy to comply!
I was extremely lucky! I walked away with a dislocated knuckle and 15 stitches on my right hand along with some road rash on my legs and belly, but my motorcycle was toast! I am truly grateful that the outcome wasn’t much worse, as it most certainly could have been.
When you have a close call like that, you start thinking of your financial well-being. While sitting in the CAT-scan machine, these were the six main thoughts that crossed my mind, and I share with you so we can all learn.
1. The first question that went through my mind was, “Do I have enough life insurance?” I mean, really enough to make sure my family will be taken care of for the rest of their lives! General rule of thumb is 5-10 times your annual salary, but depending upon other factors such as debts and your spouse’s ability to work, you might need more. In life insurance, they say that better 5 years early, than 5 minutes too late!
2. The second question that went through my mind was, “Do I have adequate disability income insurance?” —in other words, a policy that can provide you with a monthly income if you can’t work due to an accident or illness. Our lives revolve around our incomes. When our income stops, so does our lifestyle. And to think that you would be a drain on family finances without contributing is not a very comfortable thought.
3. The third thought was on long term care— a policy that can help pay for a nurse, assisted living facility, or home healthcare if you are not able to perform daily living activities such as bathing, eating, going to the bathroom, and so on. This type of policy is typically for older folks, but do you remember Christopher Reeves? He fell off his horse and was paralyzed from the neck down for the rest of his life.
4. The fourth thought was on health insurance. You would think that would be the first thought, but it wasn’t! A good health insurance policy can provide a stop loss and take care of your major medical bills so that you don’t have to go bankrupt trying to pay them on your own. What if the party that was negligent didn’t have any liability insurance in place? I would have had to pay all of the medical bills myself.
5. The fifth thought was on having a last will and estate plan in place. We all need some estate plan in place and at minimum that includes a last will and testament, power of attorneys for healthcare and financial matters, along with a living will.
At the time of writing this article, the artiste Prince had just passed away and they couldn’t find a will. With an estate of over $300 million, over $150 million will go to estate taxes, not to mention the family feuds that may go on for years. Imagine what he could’ve done with all that money if given a choice of paying taxes or supporting a cause of his choice.
Did you know that in some states if you die without a will, the state will write one for you? Do you really want the government writing your last will and testament?
The durable power of attorney for healthcare and financial purposes allows your spouse or other family members to make healthcare and financial decisions on your behalf if you are unable to do so due to medical incapacity such as an accident or illness.
You should also have a living will in place that gives instructions to your family members on whether they should keep you on a life support system if you are in a vegetative state and the doctor says the possibility of you coming back is unlikely.
6. The final thought was, “What if the tables were turned?” What if I was the driver of the SUV and this boy was paralyzed or killed due to my negligence? How much compensation would his family want from me? A good auto policy with an umbrella policy that extends the liability coverage of your auto and home would not only provide additional coverage for the party that has been hurt, but may also help you with some asset protection in the event of a lawsuit.
In my self-analysis, I realized that as an insurance agent and a financial planner, I had most of the pieces in place with the exception of the long term care insurance and the wills. We had done our wills and estate plan 15 years ago but just like Prince, we simply don’t know where the papers are!
It’s not enough to have done them. You also need to be able to produce them to the courts so they can take effect. For example, if you keep all your important documents in a safe deposit box, be sure to tell someone where the box is located and make sure they are authorized to open it!
So the question I get asked the most now is, “Will you get another motorcycle and ride again?” Absolutely!! But I would need blessings from my wife, kids, and parents first, because I know first-hand how much assistance is needed just to do basic things like bathing when you are injured, and it is not fair for me to assume they are fine with it. But I do know that I am not the type of person who lives in fear. Accidents can happen anywhere, and for that reason, most people should have these basic stop losses in place.
Moneywise is hosted by Rajesh Jyotishi with Shalin Financial Services, Inc. Rajesh Jyotishi is a registered representative of Dempsey, Lord, Smith, L.L.C., which is a registered broker-dealer and a member of FINRA/SIPC. Advisory Services are offered through Dempsey, Lord, Smith Investment Advisory. Rajesh has been a resident of Atlanta since 1975 and in the financial services industry since 1991. For questions, he can be reached at 770-884-8175 or at RJ@shalinfinancial.com. |
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