Master Your Money Bootcamp: Figure out how to protect the wealth you've built

Welcome to the third week of the Master Your Money Bootcamp. This week we're talking about how to protect the wealth you've built.

Exercise 3: Protect your wealth

If you've ever seen a cruise ship, you've probably noticed liferafts lining the sides. They're bulky and they take up space, and the chances they'll be used during a voyage are slim. But if the ship starts sinking, they're a lifeline.

Insurance can serve the same purpose for your finances. Premiums will take up some space in your budget, but a policy that replaces your income or pays a benefit to your loved ones in your absence could be a lifesaver. And before you shrug off life insurance or disability insurance because you're "too young" - oftentimes it's cheaper to get coverage in your 20s and 30s, so you're actually losing money if you wait.

The goal for this week: Look into insurance and estate planning to protect what you've built.

1. Review your insurance coverages. A lot of people ignore insurance because they think it's too expensive or a waste of money. In fact, the benefit you or your loved ones could receive is many times the amount you pay each month to keep your policy active. There are two main types of insurance to consider if you want to protect your wealth or your income:

• Life insurance: If someone - a child, partner, or relative - depends on you for financial support, you should have life insurance. Even if you don't fall into that camp, it might be a good idea to have life insurance if you have substantial debt that would be left to a loved one to pay off if you die. By paying a monthly premium, you're guaranteeing that your loved ones will get a sum of money (usually tax-free) when you die.
• Disability insurance: No one thinks they're going to become disabled or too ill to work, but it happens. If you're the breadwinner for your family, this coverage is a must-have because it will replace all or some of your earnings if you're unable to work.

2. Make a succession plan. Chances are your goals don't just involve you, but also include children, a partner, or other family members. At the very least, make sure you have an updated will that specifies how you want your assets distributed upon your death, and if you have children, who should be their guardian. Also, make sure your life insurance policy and retirement and investment accounts name a beneficiary. This is the person who would get the benefit or balance you leave behind.

TIP: If your finances are straightforward and you don't want an advisor's help deciding who will inherit your assets, you can find a template or use online software to draft a perfectly legitimate will. You can, and should, revisit it every few years or when something changes significantly in your life.

As a reminder, here's what you'll accomplish in this month's Bootcamp (we'll link to each exercise as it goes live):

Master Your Money Bootcamp: Stick to the plan

• Exercise 1: Check in on the groundwork you've laid so far
• Exercise 2: Re-evaluate your goals
• Exercise 3: Protect your wealth
• Exercise 4: Problem solve
• Virtual Live Event: How to Invest Smart & Build Wealth

For each exercise, you'll get a detailed explanation of how to complete it and why it's important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.