Rainy day Fund
There is more to keeping a rainy-day fund than simply throwing funds into a
jar. As we discussed in the previous article regarding maintaining a rainy-day fund,
these funds are necessary for various purposes, such as ensuring that your daily
expenses are covered and you are capable of providing financial security during
emergencies. While the goal of a rainy-day fund is to save money for unexpected
events, it’s not necessary to deposit all of your money into the jar at one time,
especially when you are uncertain about the likelihood of a future catastrophe.
Instead, it’s important to find a balance between saving and not depleting your
finances. So, how can you address this issue? The solution is simple: develop a
plan that suits your financial situation and allows you to save money effectively.
In our daily lives, we apply a similar approach to managing our bills. We don’t
receive all of our bills at once, nor are we required to pay them all at the same time.
The same principle should be applied to your rainy-day fund. The most effective
strategy is to establish a payment schedule that aligns with your financial capabilities
and preferences. This approach also applies to the MBA Insurance Plans available for
NALC members, which I briefly discussed in the previous article. Each insurance plan
is designed to accommodate specific living situations. Today, we will focus on two
plans: Whole Life Insurance and MBA 20-pay Whole Life Insurance.
For the MBA Whole Life Insurance, you have the flexibility to choose a plan
and determine the coverage amount that you are comfortable with paying. Once
you’ve established this, premium amounts are calculated based on your chosen
policy and your current age. These premiums remain consistent throughout your
lifetime. Unlike many other insurance policies, you have options for premium
payments. You can choose to pay once a year, 12 times a year, or opt for bi-
weekly payments through the payroll deduction plan. It is important to note that
premiums must be paid for the duration of the policyholder’s life. However, the
policy allows you to borrow money from it while keeping your insurance plan
and premium payments intact. Additionally, you have the option to trade in your
plan for a cash value, which can be received as a lump sum or an income check.
Now let’s discuss the MBA 20-pay Whole Life Plan, which offers coverage
for both the letter carrier and their children. With this plan, the premiums you pay
are used to cover expenses for both yourself and your children’s future. Payments
are made for a maximum of 20 years. After 20 years, you can choose to retain the
coverage at no cost or surrender your policy in exchange for a cash value, similar
to the first plan. If you decide to keep the plan, your cash value will continue to
grow, and you can choose to surrender it at any time to access the accumulated
amount. In the unfortunate event of an untimely death, the policy will provide
the chosen coverage amount to the survivors.
Both plans offer you control over your financial strategy as an NALC member. They ensure that you receive the necessary coverage while allowing you to
determine the most suitable payment method and utilization of the funds based
on your specific circumstances. Whether you have a family and want to secure
their financial future in case of any unfortunate circumstances, or you are an individual working for yourself, there are plans tailored to accommodate your needs.
Although these plans have similarities and differences, it’s important to remember
that MBA prioritizes the best interests of NALC members when selecting a plan.