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What to Do with Your 401k After You Leave a Job

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Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.

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Life Insurance for Children Is the Best Gift You Can Give Your Baby

Death: it's a topic most of us don't want to talk about. So it's no wonder that as a life insurance agent when I worked in the financial sector, most of my clients didn't want to discuss life insurance. Nobody wants to think about dying, especially when it concerns the death of their children. But I made the life insurance discussion a key point with my clients that were either expecting or recently welcomed a newborn. In my opinion, life insurance is one of the best gifts you can give your baby, and here's why.


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The primary function of life insurance is to provide for loved ones in the event that the insured individual passes away. Most financial advisors will tell you that it is of the utmost importance that the head of the household, or the person who makes the most income, have some sort of life insurance to replace lost income if they pass away. So why would you need to take out a life insurance policy for a baby when they aren't providing financially for the family?

To understand child life insurance benefits, first, let's explain how life insurance works.

A life insurance policy pays out a sum of money to the beneficiary if the covered person passes away during the policy term. The two basic types of life insurance: term life and whole life.

When looking at policies for young children, I suggest that parents look into limited pay whole life policies that can be completely paid for in terms such as 10, 20, or 30 years and will last for the insured child's entire life.


Whole life insurance policies can be expensive, and the older the insured is, the higher the premiums can be–which is one great reason to start a policy on a newborn. I personally have whole life policies on both of my kids that I took out within their first few months of life. I pay less than $150 a year per child, and they will be completely paid off when they turn 20! In comparison, the average whole life paid in a 20-year policy on a healthy 30-year-old female can cost almost $2,000 annually! Your kids can thank you later on that savings.


At a training I once attended for work, we were sharing personal life insurance stories from our customers. One, in particular, stuck with me. My colleague shared a story of a customer who came into the bank with flowers for someone who unfortunately had been retired for many years. The women explained to the employees that she had taken out a life insurance policy for her child with the employee years ago. She had come back to thank him for suggesting it to her because her son now had an illness that would prevent him from purchasing life insurance for himself. She was truly thankful for the advice given to her. Had it not been for that employee's suggestion, her son may never have been able to take out a life insurance policy to protect his loved ones in the future.

Unfortunately, it's true that when a child develops a medical problem, they may have trouble qualifying for life insurance later in life, in some instances even becoming uninsurable. With child life policies, the premium will never change, even if the beneficiary becomes unhealthy. Many insurance companies even have a guarantee to add more coverage rider (an amendment to the policies terms), much like the most recognized juvenile insurance provider, Gerber Life Insurance. With Gerber's guaranteed right for a child to buy more coverage as an adult policy, the insured can buy up to ten times the original amount at standard age rates—no questions asked.

The savings component to whole life policies can benefit children when they become adults. Whole life policies accumulate cash value from the premiums you pay over time. The cash value earns interest based on the dividends declared by the insurance company that owns the policy. In most cases, the return on the cash value is much better than that of savings accounts or CDs.

As the cash value builds in the policy, there are numerous options that can be used:

  • A partial withdrawal of the cash value can be taken; however, if it is not paid back it reduces the amount of the death benefit and may incur fees. It is recommended that this only be done in emergencies.
  • Loans can be taken out against the cash value, which creates a tax-free way to withdraw money as needed and often is available through the policies with low-interest rates.
  • The cash value can be completely withdrawn and the policy surrendered. Some beneficiaries may choose to do this when they come of adult age to help pay for school, a first home, and so on. It's wise to check into the specifics with each policy because some have surrender fees if the money is withdrawn before a certain amount of time has gone by.



Parents or grandparents can switch over policy ownership to the child once they reach adulthood. In fact, most plans automatically switch ownership once the child turns 21. Before purchasing any insurance, it is important to look over your financial situation first and ensure that you will be able to pay the premiums.

Looking at some statistics collected in the 2019 Insurance Borameter Study, more consumers say they need insurance than those who say they own them, and affordability and value are two obstacles that stop Americans from buying life insurance. But more than half of respondents overestimate its true cost by 3x or more. It seems the primary reason that nearly half of Americans don't have life insurance is due to lack of knowledge about it. What better way to help educate our future generations than to give the gift of insurance to your little one!

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So What Is a Home Equity Line of Credit?

Meet Jane.

Jane is a thirty-something homeowner with two young kids. She walks into her local bank one day to talk to someone about taking out a loan to replace her outdated furnace. She wanted to put it on her credit card, but she got herself into trouble with credit cards when she was younger, so she wants to look at other options. After talking with her a while, her personal banker, Joe, suggests a home equity line of credit, to which Jane replies, "A what?"

I met many customers like Jane during my time as a personal banker. Many people simply don't know what or how home equity lines of credit work.

A HELOC (home equity line of credit) isn't for everyone, but it often can be the perfect solution for many. First off, you have to be a homeowner and have equity in your home.

What is home equity?

The equity in your home is what you truly own, debt-free. Let's say Jane's house is valued at 200k and she has a mortgage balance of 60k. This would mean that Jane's home equity value is 140k. Over time, the more you pay off any lines against your house (mortgages), the higher your equity value goes. Home improvements that increase the value of your home also raise equity.

A home equity line of credit works much differently than a mortgage or home equity loan. I find it best to view it as working similarly to a credit card. You may draw funds out of the line of credit only as needed. Therefore, technically you can take out a HELOC without ever actually touching the money and having to pay it back.

How much do I qualify for?

Typically, most banks will let you borrow anywhere from 75% to 90% of the equity in your home. To figure this out yourself, take the value of your home, subtract any loans against your home, and multiply that number by the percent the bank will let you borrow. Jane's banker tells her she is able to borrow up to 80% of the equity in her home. You would multiply 140k by .80, coming to a figure of 112k being the maximum amount Jane can borrow. It's important to note that you do not need to borrow the max available. Keep in mind that your debt to income ratio and credit score can also affect how much you qualify for.

How much should I take out a line of credit for?

This is the number one question that was asked to me by customers looking to take out a line of credit. And really, there is no right or wrong answer. You can always take the max available, but you don't have to. There are things you need to consider when deciding how much to borrow. If you are a person who is easily tempted to use that money, even when it's not needed, it probably isn't best to request the max amount unless you know that you will be able to afford the monthly payments.

On the other hand, I also tell people it can be a good idea to take more than you need right now, so you have it as a "cushion." One of my customers came to me to request a HELOC to update her kitchen. Although she qualified for a much higher line, she insisted on only taking what she needed at that time. Not even a year later she came back to me. She had used up the entire amount available on the line of credit and now needed more to fix her roof. She had to go through the entire application process again to do a HELOC increase, and she wasn't happy that it wasn't as simple as saying "I need more money" and having the money readily available. This is the reason I tell people to have a cushion. That cushion can be a lifesaver in emergencies.

What can I use my HELOC to pay?

Most people assume HELOCs can only be used for home renovations, but, in reality, you can use the money for anything. A HELOC can be a great tool to consolidate credit card debt. According to the federal reserve, the average credit card rate was around 15% in 2019, and that rate is often higher for people without excellent credit standings. In contrast, the average HELOC interest rate, according to Bankrate, is around 6%.

What's the application and fee process?

Before heading to the bank, make sure you have the following documents:

  • W2s / 1099 forms
  • Last 2 years federal tax returns
  • Recent pay stubs
  • Proof of any other income

The application process usually takes anywhere from a few days to sometimes weeks, depending on how much information the underwriters may need. The bank typically does an appraisal of the house. In some instances, they may need access to the inside for appraisal, although this is typically not necessary.

After the HELOC is approved, the bank will schedule a closing date and time for you to come in and sign the mountain of paperwork. It can seem like a lot, but you will receive copies of everything, and you have three business days to look it over and cancel if you want.

Common fees associated with HELOCs are lender fees, annual fees, and cancelation fees. Do yourself a favor and research lender options before applying, as there are plenty of banks that do not charge most of these fees. When I worked at M&T Bank, the only fee applicable to a HELOC was a cancelation fee, and that only applied if the line was closed entirely within the first three months.

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How to Make Sure You Get the Severance Package You Deserve

If you're one of the 800 million employees who can expect to have their jobs taken over by robots by 2030, now might be a good time to look over those company policies regarding severance. There might be protections in place that will keep you from moving into the poor house even if you do find yourself out on the curb.

What Is Severance?

Severance is an employee benefit paid to workers who are laid off or terminated for matters unrelated to their job performance. Is your department being eliminated? You might get a severance package. Fired because you stole from the company? Or quitting to live your dream of #vanlife? Sorry, severance is likely not in the cards.

Who Gets It?

In general, companies aren't required to provide severance packages, and most employees do not have a legal right to a severance package when their employment ends. When companies do offer severance packages, it's not just to be nice. Severance agreements can help reduce an employer's legal liability, and as such, many companies will offer severance packages regardless of whether they are required to do so. Check your company's policy or the employee handbook to find out what's on offer.

When to Negotiate

There are two good opportunities to negotiate a severance package, Jaime Klein, founder, and president of Inspire HR, told Refinery29: At the beginning of the road, when you're hired, and at the end.

Bringing up severance during the hiring process is a little like asking someone to sign a prenup; it's a delicate subject at best. These days, though, with so many industries on shaky ground, Klein says it's usually okay to ask once an offer has been extended. After the layoff, remember to be polite and have a rationale for your negotiation request.

Remember: If your workplace is unionized, you will likely be able to negotiate better severance policies, and your right to do so is legally protected.

What Can You Expect in a Severance Package?

Severance packages usually include some form of payment based on length of employment, typically one to two weeks for each year you were with the company. It's given as a lump sum or paid over a number of weeks or months. Your severance agreement should also include any accrued but unpaid PTO or vacation pay.

Under the Consolidated Omnibus Budget Reconciliation Act of 1995 (COBRA), a terminated employee is entitled to continue medical/health coverage under the company's plans for up to 18 months after termination (or up to 29 months if the employee is disabled). These premium payments are your responsibility (Sound no bueno? See "What Else Can You Ask For?" below.).

You might be asked to sign a non-disclosure agreement (NDA) as a requirement to benefits like severance pay and COBRA. More on that below.

What Else Can You Ask For?

The agreement isn't cut and dry, notes Richard Harruch on Forbes, and there are a number of things you can ask for:

Can you get the severance in one all-cash lump sum upfront, instead of spreading it out over time?

Can the severance pay also include any partially or fully accrued but unpaid bonus?

If the severance pay is the continued salary for some period of time, does the continuation pay continue even if the employee gets a new job?

Can your employer cover the COBRA payments for anywhere from 6-18 months?

If your termination is a result of a "change in control" of the company (like a merger or other acquisition), you might successfully argue that the severance pay should be greater. But be aware that such change in control payments could rack up a 20% excise tax on the employee.

Go over any non-compete clauses of your severance or hiring package with special attention to geography, scope of the agreement, and duration. Many employers will be open to narrowing the scope of this after a layoff.

That NDA you had to sign? They might make it a two-way street, suggests Harruch. Language that some employers have approved is: "The Company shall not authorize and shall take reasonable measures to prevent its present or former officers or directors from making derogatory or disparaging statements regarding Employee to any third party."

You might go one step farther than including language that bars the company from speaking ill of you and require that a section of the severance agreement include language that requires your positive recommendation. For example, "company acknowledges and agrees that Employee has performed admirably in his/her work with the Company and Company will provide positive recommendations to any interested new employers of Employee." Or, you ask for glowing recommendation letters from supervisors and have the company provide those letters to any prospective new employer.

Know Your Rights

If your company has more than 100 employees and plans to lay off a lot of people, your employer is required to give you 60 days notice of a company closing or a large departmental closing. If they don't, you are legally entitled to severance pay, thanks to the W.A.R.N. Act (Worker Adjustment and Training Notification).

If you are over 40 years old and the company offers you a severance package, the company must give you at least 21 days to consider it and 7 days to revoke after you sign the package, thanks to age discrimination laws.

Some states, like California, have more protections in place for workers whose employment ends without cause. In other places, such as New York, employment is "at-will," and either employer or employee can end a working relationship for any reason. Wherever you live, research and familiarize yourself.

Look to the future

Getting laid off is like a breakup you didn't see coming. It's disorienting, can ruin your sense of self, and rock your most basic sense of security. It's also part of life and something you will survive.

"Getting reorganized, laid off, restructured happens to nearly everyone," Klein said, and it's rarely personal. "Unfortunately, companies have very little loyalty to employees anymore."

Once you've picked yourself up and dusted yourself off — and yeah, you might need to cry and sulk, just like your last broken heart — get back to work. Your job now is finding a new job, and often a former employer will offer outplacement services to help you spiff up your letters and resume. Even if they don't, work your network and keep your head high. You've gotten a job before, and you can do it again.

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