Money Found Under the Couch Cushion

With apologies to Lanny (Dividend Diplomats), I figured since it’s relatively appropriate I’d play on the title to his recent post.  Couch money generally refers to the spare change lurking in the cushions of your sofa and  is commonly used to describe assets you own that have been long forgotten until found while scrounging in the crevices.  I encountered such an animal this past month and figured I’d share my experience to (at least) give my readers a little food for thought. 

As many of you know, I suffered a series of strokes a few years ago leaving me disabled.  Last month, I received notice from one of my life insurance policies that the Waiver of Premium Disability was due to expire.  I had to scratch my head on that one.  I just had to pick up the phone and find the answer to that one.  To make a long story short, when I purchased a whole life policy forty-some years ago it came with a waiver of premium payments in the event of disability.  So I completed the forms, got my doctor’s signature and submitted them to the insurance company – along with the government’s declaration.  This week a refund check arrived in the mail for the premiums paid subsequent to the SSA’s finding as well as a notice advising future premium payments were fully paid.

In one fell swoop, the Yield On Cost of this investment went from modest to significant dependent of course on my future life expectancy.  But I got lucky … what if I’d missed the notice?  Or ignored it?  My mistake was to put this policy aside for so many years without a cursory understanding of the benefits.  From my experience, I’ve put together the three critical items to navigate the stuff life tends to throw your direction.

  • Understand Your Benefits

Independently review not only your personal policies but the coverage provided by your employer on a regular basis and ensure your spouse or trusted advisor is in the loop.  My final employer outsourced all final processing to Marsh & McLennan (MMC) to ensure all legal requirements (HIPAA, COBRA, et.al.) were met.  But their fiduciary duty is to the employer not you.

  • Have An Emergency Fund

Although significantly reimbursed in my case, the initial outlay for expenses (medical and living) is mind boggling.  Rather than cash, I used one share of Berkshire Hathaway (BRK-A) as my fund.  Purchased for $60,000 and sold for $178,000, this provided the cushion necessary during the year before some semblance of normalcy reappeared in our lives.

  • Have An Investment Roadmap

Although most DGI portfolios are designed to operate on auto-pilot, the missing link in mine was a roadmap that my wife (or designated advisor) could follow outlining the reasoning used in purchasing or holding specific securities.  This has been addressed so if required at a future point in time, a binder containing my thought process is available for reference.

Just some food for thought as you navigate along your individual paths.

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