‘Til Death Do Us Part: When “What-If” Becomes “What Now”

Regular, standard income

From a monetary standpoint, what is their salary or earned annual income? That’s your baseline. As this baseline will reflect current-year value, you can simply multiply this by the number of years to retirement to factor in the long-term implication of that potential loss. You might also want to use historical CPI or a conservative 2 – 3% inflation-adjusted future earnings number to more accurately map out the potential lost income.

Also consider any workplace benefits, like healthcare or dental coverage. Is there a differential involved if you had to switch to your benefits instead? Include that number in your calculation.

Next, consider any work-related future income from assets or accounts like pensions, partner equity distribution, 401(k)s, or bonuses.

Secondary potential costs

Finally, think through secondary, non-monetary contributions that would likely incur a cost to maintain should your spouse pass.

For example, do they clean your home? Drive children to activities? Grocery shop and meal prep? Do laundry? Maintain the yard? Would you need childcare if they were no longer there to care for your children during the days and/or evenings? Each of these is a service that, should your spouse no longer be there to provide, would cost you financially to hire someone else to complete.

Special note for CPA households

As a CPA, your household likely has some added financial factors you should keep in mind when assessing your financial situation. If any of these apply, make sure to consider them in your financial planning picture:

• Bonus structures, partnership distributions, deferred compensation
• Income/cash flow irregularities (busy tax season vs. off-season)
• Practice ownership stakes or partnership buy-in obligations
• Professional liability insurance costs that continue post-death
• Client relationship continuity (especially for sole practitioners)

Estimating the potential lost income is about more than simply figuring out the number that impacts your household today—you should also consider your long-term future.

Many advisors traditionally recommend saving 10 times your annual income for retirement. However, because of the complexities of some CPA income structures, you may find that rule understates your needs, especially if both you and your spouse are high-income earners.

Benefits if you become ill

What would happen to your family financially if you or your spouse were diagnosed with a terminal, chronic, or critical illness? These sicknesses often come with their own associated medical costs, not to mention the financial downturn from eventually losing that person’s income. However, many policies include an “accelerated benefit” feature that allows you to access a portion of your death benefit while you’re living under specific conditions. Rather than waiting for the death benefit, you can access the funds to help with things like medical expenses, in-home care, or replacing lost income during treatment.

One of the most important distinctions is that, unlike a policy loan, living benefits typically don't require repayment. Whereas a policy loan—if available—accrues interest and reduces the death benefit your beneficiaries ultimately receive, living benefits generally don’t have a repayment obligation. This is a financially meaningful difference.

These kinds of provisions help minimize the financial impact of an unexpected illness—however, it’s important to note that if you use this option, it is considered an early payout of the policy’s coverage amount; not something that pays in addition to that amount.

Most policies also cap the amount you have access to, generally at somewhere between 50 – 75% of the coverage amount, though this varies by carrier and policy. Accessing this benefit also requires documentation, such as a physician’s certification of your diagnosis.

Other features that help while you're living

Another way to further enhance coverage is to add Accidental Death & Dismemberment (AD&D) coverage. Some plans may include this as a feature, while others offer it as a rider or separate policy. This coverage can pay a benefit on its own or in addition to a death benefit if you experience an accident-related covered loss—such as the loss of a limb or a specific sense.

Many policies also offer dependent child riders, which generally offer coverage for children at a relatively minimal additional cost.

These kinds of living benefits are easy to overlook when comparing policies but can add meaningful breadth to your overall coverage. Every policy and provider has its own rules, so carefully read through plan details to understand the nuances, which conditions are covered, when coverage kicks in, and any eligibility rules that may apply.

This month: Assess

Set a deadline for yourself to inventory which insurance coverage(s) you already have; use that finding to help determine your actual needs.

• List all existing life insurance policies you and your spouse currently have. Note coverage amounts, designated beneficiaries, time remaining on your term (if applicable), and any riders or add-ons.
• Review your employer-provided coverage, determining policy types and amounts, as well as what would carry over were you to change jobs/companies.
• Pull your current will and review beneficiary designations
• Quantify your spouse’s economic value (see above).
• Determine your actual life insurance needs. Our Needs Estimator can help!

Next month: Explore and activate

• Compare the inventory you compiled last month to your Needs Estimator findings to determine whether you have gaps in coverage types or amounts.
• Review your AICPA member benefits—remember, your coverage can follow you throughout your career and into retirement, as long as you remain a member!
• Request quotes on any Plans you’re interested in.
• Activate coverage, pay any premiums, and take a breath!

Ongoing: Maintain

• Choose a review month—ideally, after busy season—and enter review reminders in your calendar apps.
• During your review month, review all beneficiaries for your will/trust, investment accounts, and insurance policies. It’s a good practice to do this on an ongoing, regular basis as well as any time you have major life changes, such as buying a new home, adding to your family, or changing jobs.
• Schedule an estate planning review if it’s been more than two years since you last updated your documents.

What's Next?

Remember, better financial planning isn't built all at once; it's a practice—one you’ll revisit as your income grows, your family changes, and your career evolves. You already spend your workdays helping clients build financial clarity out of complexity; this is simply doing the same, applying it closer to home.

Through careful analysis, using the tools available to you, and leveraging your AICPA membership benefits, comprehensive planning is at your fingertips.