10 Financial Events to Plan for in Your Children's Lives

Disability of a Parent
No one wants to think about it, but for your child’s sake, you need to be financially prepared for the possibility that you could become chronically ill or disabled. ©Thinkstock

What if you're injured in an accident or develop a chronic illness that keeps you from working? How will you take care of your family? The first line of defense is a savings account. Maintain an easy-to-access account with enough money in it to cover six months or more of your expenses.

After that, you will need disability and health insurance coverage. These are essentials for most people, but especially for parents, since medical expenses are the number one reason for personal bankruptcy. And if you suddenly find yourself disabled, you are likely facing not only potentially catastrophic health care costs, but also a reduction or complete loss of income. Many employers offer both health and disability insurance. If yours does, sign up, and include your spouse, if appropriate. If not, thanks to the Affordable Care Act, it is much easier to get health insurance.

Disability insurance can be expensive to obtain on your own, but there are advantages to private insurance versus insurance from your employer. Often, individual policies will pay you up to 70 percent of your income tax-free, which probably comes close to 100 percent of your take-home pay. When your employer provides the benefit, payouts are taxed as income [source: Dummies].