One of the biggies is this new trend of parents financially bailing out their adult children. Quite a big media issue – parents having to help out with the mortgage, or looking after their grandchildren. Even when they’re “all grown up”, we want to protect our children. Unfortunately illness or injury can strike anyone.

Picture this. You’ve recently retired, and you’re reasonably confident you’ll have enough savings to fund the comfortable lifestyle you’d always hoped for.

I read an article where a recently retired couple received a phone call with some bad news – their daughter was found face down in a pool, you now have to bring up your grandchild but you don’t have additional money to do so.

The financial decisions you make today can have long- lasting consequences.

That’s why it’s so important you make the right decisions – including making sure you and your family have the right plans in place to achieve your long-term goals.

You may never have thought about how your retirement plans may be derailed if a sickness or injury happened to a child of yours. Fortunately there are strategies that may help protect your retirement lifestyle as well as your children’s financial futures.

According to a 2010 report on underinsurance:

• One in five families will be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work
• 95% of families do not have adequate levels of insurance

(The Lifewise/NATSEM Underinsurance Report, February 2010)

Here are a series of questions that you and your adult children should be addressing.

Do you have children?

• If they suffered a serious illness or accident and couldn’t work for an extended period, how would they cope financially?
• Do they have a mortgage or any other business or personal debts in their name?
• If they had to pay substantial out-of-pocket medical expenses, where would this money come from?
• Are you the ‘guarantor’ for any of your children’s loans or debts?
• If you had to help your child out financially, what would it mean for your own financial situation – both now and in retirement?
• If your child had to spend an extended period of time in hospital, who would look after your grandchildren?
• If your child or their partner could never work again, how would they afford to provide for their children’s ongoing expenses?
• Do you know who your son/daughter has listed as the guardian of their children if they were to die unexpectedly?
• How would that guardian be able to support your child financially?
• Would you be able to stop work earlier than expected to take care of your grandchildren if they needed you? If so, how will this impact on your finances – both now and in retirement?

Does your child have a spouse/partner?

• If their spouse/partner couldn’t work for an extended period due to a serious illness or injury, what would that mean for them financially?
• If your child had to stop work temporarily to look after their partner, where would that leave them financially?
• If their spouse/partner passed away unexpectedly, how would they cope financially? Who would they turn to for help?
• Does your child’s partner have any additional personal or business debts – on top of the debts they share with your child?

Talking to your children about life insurance 

Many adult children will discuss their major financial decisions with their parents. Major events like getting married, buying a house, or even changing jobs are good opportunities to talk to your children about life insurance.