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Delaney and Delaney Legal Blog

Thursday, January 4, 2018

The Most Important Insurance Policy for Young Families

submitted by Brian J. Delaney, Esq. 

Every year, a typical family may spend well over $5,000 on insurance premiums (not including health insurance): Life insurance, car insurance, homeowners insurance, umbrella coverage, smart phone insurance, etc.  What's the point of paying these premiums year after year?  These policies protect you and your family from a potentially large financial loss even if the risk of an incident happening is extremely small.  

For example, the annual premium on a 20 year $1M term life insurance policy for a 35 year old male might be $1,000.  In the unlikely event of death during the 20 year period, the insurance company will pay the named beneficiaries a death benefit of $1,000,000.  Will the insured complain he wasted $20,000 if he doesn't die during the 20 year period?  He shouldn't because the premiums paid provided him peace of mind that his family would be financially secure if were to pass away unexpectedly.

Many young families will have these protections in place as they raise children, buy real estate, and increase their net worth, yet neglect to implement the most important insurance policy - a comprehensive estate plan.  After all of your hard work, what happens if you or your spouse were to become incapacitated or suddenly pass away?  Without a complete plan in place, your family will likely be at the mercy of probate court.  

Why are many people adverse to completing an estate plan?  Death is a difficult topic to discuss and that's completely understandable.  Here’s the thing, however:  Estate planning has more to do with living than dying, especially for a young family.  If you became sick and couldn't make your medical or financial decisions, who would? (Hint: Without the appropriate documents in place, your spouse does NOT have an inherent right to do so without probate court approval).  If you were to pass away suddenly, who is going to take care of your children and manage their financial affairs?  How can you prevent them from squandering their inheritance the moment they turn 18?  How can you avoid the costs and delays of court proceedings? How can you minimize income and estate taxes?

A comprehensive estate plan consists of more than just a couple of legal documents.  Unfortunately, some companies give the false impression that an estate plan is simple as filling out an online form from the comfort of your living room, paying a small fee, and printing the documents.  (Ironically, the leading provider of online legal documents has a disclaimer at the bottom of its website stating they are not a substitute for an attorney and cannot provide legal advice!) Everyone's situation is different and there are a number of factors that determine the appropriate plan and a qualified estate planning attorney can guide you through the process.

Over the next few weeks, I will be highlighting some estate planning topics on this blog.  Please feel free to call or email me (bdelaney@delaneylawoffice.com) if you want to learn more about our comprehensive estate planning  process.

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