Friday, July 10, 2009

Palin's Resignation 
It's no mystery to me why Palin resigned. She was right to resign. It was a no brainer. Had she not resigned, she would be doing irreparable financial harm to her family.

Here's why.

Sarah Palin and her husband have five children and one grandchild. All of them, with the possible exception of Track, who's in the Army, are going to need a lot of help. Bristol's a teenage mom who's baby-daddy is useless. Levi's parents aren't going to be much help. The burden of bringing up that child is going to fall mostly on the Palin family, and Bristol herself has exremely limited means. Piper is six or seven. Just starting school. her expensive teenage years ahead pf her, and she'll need a college fund. Bristol may need some help finishing her education.

Retirement? Palin will have a modest pension, but she hasn't spent THAT long as a State of Alaska employee. Todd? He's done ok, but with five children? He's gonna have to scramble to fund his own retirement on top of everything else.

But get this the minute they found out that Trig had Down Syndrome, the financial planning picture changes. Why? Because the Palins insurance needs changed radically.

Trig will likely never be able to work or live independently, and will be dependent upon assistance his whole life. The Palins are confronted with a number of simultaneous financial challenges:

1.) Meet the college/education needs of at least three children and one grandchild. (Track will have the GI Bill, and possibly an ROTC scholarship if he wants it, so he's less of a worry, though still may need some help when he gets out of the Army.

2.) Help Bristol with her own day-to-day expenses and those of her baby.

3.) Provide for the day-to-day needs of Trig, who's going to have some pretty serious special needs and will require more and more time and attention as he gets older and becomes self-propelled.

3.) Provide enough life insurance protection to provide for her family's substantial needs if she got on the wrong airplane or got shot by a rabid libtard.

And here's the rub: Many middle class families opt for cheap term insurance, on the theory that their need for life insurance goes down substantially when the kids are out of school and no longer dependent.

That is not the case here. In the Palin's case, Trig's need for life insurance protection doesn't end when he gets a college diploma and moves out on his own. His need is permanent. The Palins must, on their limited incomes, provide for everything above, AND provide enough money for an endowment to support Trig Palin... probably for decades.

Financial planning for children with special needs is a little different than planning for most families. And it takes quite a bit more cash flow to provide for them. Cash flow the Palin's don't have on a Governor's salary and Todd's pay.

If Palin didn't quit, they could get through the next couple of years in decent shape. But then their options would deteriorate sharply if Palin's star faded. At 48/49 years old, it would be extremely difficult to recover.

The Palins very likely need a substantial amount of permanent life insurance. Not term. Set aside for Trig. If they wanted to be equitable to all their children, they would need a lot more permanent insurance, as opposed to term.

It's a lot more expensive, in terms of cash flow and monthly required premium, to buy that insurance in her late 40s than it would have been if she were in her 20s or 30s. And there's not as much time to build it up, either. Had Palin tried to stick it out on the Governor's salary, it would have been almost impossible.

But quitting, and getting a book out there, and hitting the lecture/fundraiser circuit in the next few years, would allow her to do all that. She can take care of her family, provide a legacy for her other children, spend some time with the kids, create something that creates residual income (book royalties), and STILL have a shot at running for president or senator.

Most importantly, if she doesn't provide for Trig, her critics sure as hell won't. No one else can do it but her.

Maybe she didn't explain it too well. And maybe it's none of our business anyway. But in my view, she did the right thing.

Best of luck, Governor Palin and family.

Splash, out


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I love the way you tackle the big issues in life while so many others live in a pretend world.

My wife was never seriously ill. She was way to young to have the cancer that killed her. Way too young. We didn't have any life insurance on her, just me because we were of limited means and I made about 85% of the family income. We planned on getting her a policy the year she was diagnosed. It wouldn't have taken much. Even $50 a month would have helped more than most people can imagine.
Keep up the good work, I hope everyone who reads this blog post takes the time to review their insurance policies.
Very good points. We, too, had good term policies until our youngest was born last year with ds. We decided to purchase a SUL policy to guarantee funding for her SNT. More expensive that's for sure, but no more costly than what we are putting aside for our other children's education IRAs.

Is it unfair that we are only leaving the money to her and not splitting it equally? Hmm, she already got a little something extra that could be considered unfair.

Anyway, I have no idea why Sarah quit (other than what she said publically). But, I hope it wasn't about $. She could have at least finished her term if that were the issue.
Republicans have been privatizing and cutting the services that make up the social safety net, and vilifying the people who need them since Reagan. 'Entitlement' is what they call programs like Medicaide and special education.
Most families with Down syndrome children have modest incomes and none of the opportunities the Palins have.
This post does an excellent job of explaining some of the long-term responsibilities families carry for their adult children. But even if the Palins are able to create a bubble of financial security, Trig will need more than that. He will need a community where difference is respected, and a chance to meet other Down syndrome adults. That means that families without much money can't be abandoned to financial triage and insurance rationing.
Wonderful to hear from you guys.

DS Mama... I'm always vague on here talking about insurance topics for compliance reasons. But definitely make sure you OVERFUND that SUL policy. Don't just make the target premium. You have to overfund it like crazy. (You can always pull money back out in a pinch, if you really need it!)

Also, ask your agent what happens if you live to be 90 or 100. It's a possibility now and you have to plan for it. The reason you have to OVERFUND in the early years is that UL policies eventually collapse without that substantial overfunding. So have him run a projection for you, or talk about no-lapse guarantees and how long that lasts.

My preference is for whole life, paid up at age X, rather than UL, but UL can work great if you fund way over the target premium. Works even better if there's a reason you believe you might not make it to age 90+ (family history, etc.)

Don't be afraid to look at life insurance to accumulate college money for your other children, too. Look at issues like what happens if your children want to qualify for need-based financial aid? Assets in Education IRAs are countable for that purpose. Assets in life insurance and annuities are not... at least under the federal system.

Also, a life insurance company is able to provide a rider that will self-complete the plan... by making your scheduled premium payments FOR you, if you should become disabled. So one months' premium can guarantee the money will be there if you die (death benefit) or become disabled.

Once I figured that out, I became a fan of that kind of planning.

Will it work in YOUR situation? No idea. This is not a solicitation.. just some ideas for you to look at. Ask your agent!!

And kudos to you for thinking through the problem to the SNT. VERY important. And kudos to your agent!
I hope it wasn't about $.

Yeah, it was about the money. Currently, the Palins are said to be on the hook for $500K in defending against ethics complaints, the State of Alaska to the tune of a cool $2 million.

You do the math.
That in itself should be an ethics complaint.
Nancy - I am confident that we can "dismantle" those social safety nets that are being used for a hammock by otherwise perfectly able freeborn citizens without deleteriously affecting people born with debilitating disadvantages.

I put it to you to tell which of these programs have been dismantled by Republicans that would otherwise have helped people like Trig. I pledge to write a letter in support of such programs if you identify them.
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