Estate Planning Checklist: 12 Things to Get in Order

Estate Planning Checklist: 12 Things to Get in Order

It may not be a fun thing to think about or talk about, but it’s important to get your estate planning organized. Unfortunately, death doesn’t just happen to other people. We should all get our affairs in order so that our loved ones can focus on grieving and moving on once we pass.

Of course, a “getting your affairs in order before death checklist” may not rank as the ultimate way to kick off a relaxing weekend, but you will rest easy once it’s all said and done. Luckily, it’s not nearly as painful as you might think. It can be less painful than doing your taxes every year. Here, we break it down for you into 12 steps.

12 Estate Planning Must-Haves

Estate planning isn’t just something for retirees or people with multiple homes. All of us need to take this step and determine how and by whom decisions will be made if we are incapacitated or near the end of our life. We also need to funnel our assets to the appropriate people when our time on earth is over.

It can sound grim, we grant you that, but it’s actually a gift to your loved ones to get all of this taken care of. So let us take you through the dozen items to wrangle so you know your affairs are in order.

1. Last Will and Testament

This is super-important because it outlines how your estate (your assets) will be divided. A will is a legal document that serves a couple of important functions. Wills are mainly used to specify how you want to distribute your assets. Assets can include things like personal property, real estate, cars, bank accounts, art, jewelry, or stocks. Despite what some people think, you can give your assets to anyone. You aren’t limited to immediate family. You can even donate your assets to charities or nonprofits if you wish.

A will also ensure that the people you care about are taken care of after you have passed away. If you have any children, a will can name whom you intend to become their guardians if you die. It can also do the same for pets.

You can create a will online using digital tools (you will need it signed and witnessed, though) or work with an attorney, often for under $1,000, to create one.

Recommended: What Happens If You Die Without A Will?

2. Proof of Identity

When the time comes for a will to be put into effect, an executor of the estate plays a crucial role. This individual, who you can name in your will, carries out your will’s instructions. To help this person do their job, make sure you have all of your IDs in one place. Documents you will want to have may include:

•   Birth certificate

•   Social security card

•   Armed forces discharge papers

•   Marriage certificate

•   Prenuptial agreement

•   Divorce certificate

This will make following your directives that much easier.

3. Digital Logins and Passwords

In recent years, our digital lives have become inextricably woven into our “real life.” It’s not uncommon for people to have dozens of digital accounts, containing vital information about our assets. Should you fall ill or suddenly die, your loved ones will likely need to access some of them. For example, you may have financial account information there, and email may be how you interact with some of your closest friends and colleagues. Fortunately, there are many ways to properly document and keep track of your online accounts. Whether you use a digital vault, an integrated password manager, or simply pen and paper, you should establish a system for your loved ones. You can pass this information along to your financial power of attorney to deal with, or you can name a digital executor to close your accounts and distribute your assets.

4. Property Deeds and Titles

Any titles you have for cars, homes, or real estate need to be gathered and put in a safe place. Details on that “safe place” need to be shared with one or two key people in your life, like your next of kin and/or your will’s executor. However, just gathering these items doesn’t mean you can necessarily spare your loved ones the process known as probate. Probate is a potentially complicated and expensive process in which a deceased person’s property is reviewed and allocated. Having a will is of course an important step, but with real estate, for example, things can get complicated even with that document in place. To skip the probate process, you can create a revocable living trust (which is discussed below), and then transfer ownership of your properties to it and list the trust as the current owner.

It’s important to remember that any names on titles or deeds will overrule anything you write in a will. For example, if you bought a car with your ex-wife a few years before you got a divorce and her name is still on the title, it won’t matter whose name you write in your will. She will inherit the car because it is her name that is on the title.

5. Revocable Living Trust

Above, we mentioned the potentially drawn-out and expensive process of probate and why you would want to take steps now to help your loved one’s avoid it later. Let’s drill down on one way to do just that. A revocable living trust is a type of legal instrument that allows you to use and control your property while you’re alive, but also change who inherits it at will. If you have one legally established, it allows all of the assets you entrust to it to skip probate, meaning your beneficiaries can receive your assets much more quickly.

After you’ve created a revocable living trust, you must also name a ‘successor trustee’ to manage your trust. This person will be responsible for distributing your assets to the proper beneficiaries.

Recommended: What Is A Trust Fund?

6. Debts

It would be nice if all debts vanished when our lives ended, but, sorry, that’s not how things work. Your beneficiaries are going to need to know about and potentially address your debts (these are often paid out from your estate before the remaining assets are distributed). To smooth the process, compile a list of all your debts. This may include things like:

•   Auto loans

•   Credit cards

•   Mortgages

•   Personal loans

•   Student loans

On your list include contact information for the lender, your account number, login information, and approximate debt amount. For credit cards, include a list of frequently used credit cards and ones you simply have but rarely use. If you have a lot of open cards in your name, and aren’t quite sure how many you have, you may want to get a free credit report from Annual Credit Report .

7. Non-probate Assets and Beneficiaries

If you have assets that are able to skip probate, meaning they can be transferred directly to the named beneficiaries after you die, then you should keep up to date on naming beneficiaries (say, if a death or divorce has occurred) and keep a list of these assets with account details. Which details exactly? Details like where any paperwork or policies are, account numbers, and contact information for the issuing entity are a good place to start.

Non-probate assets include such things as:

•   Insurance policies

•   401(k) accounts and IRAs

•   Pensions

Non-probate assets should not be listed in your will because any designations you make with each institution will override anything you write anyway.

8. Financials

While you are gathering all of your estate materials, make sure to keep a neat list of all your login and password information for the following:

•   Bank accounts

•   Car insurance

•   Credit cards

•   Health insurance

•   Home insurance

•   Life insurance

•   Loans

•   Pension plans

•   Retirement benefits

•   Tax returns

If everything is online, you may want to make sure every account is listed along with your other digital accounts in your password manager or digital vault.

9. Advance Healthcare Directive

An advance healthcare directive (also known as an AHCD) allows you to decide, in advance, how medical decisions should be made on your behalf if you are unable to communicate your wishes. AHCDs typically have two parts: designating a medical power of attorney (you may also hear this called a healthcare proxy; we share more on this below) and a living will.

A living will describes and outlines your medical care wishes just in case you are ever unable to communicate them to your healthcare providers or loved ones. It can describe any aspect of healthcare preferences, and can include things like:

•   End-of-life requests

•   Medications

•   Resuscitation requests

•   Surgeries and surgical procedures

10. Power of Attorney

This is an important part of putting together your estate-planning checklist. The goal here is typically to make sure that, if you were incapacitated (say, due to dementia or a medical emergency), someone could act on your behalf. When you give someone power of attorney, that person then has legal authority to manage all of your affairs. There are two types of power of attorney: financial and medical.

A financial power of attorney is responsible for:

•   Accessing your bank accounts to pay for healthcare, bills, groceries, and any other housing needs you have

•   Collecting upon any debts you have

•   Filing taxes on your behalf

•   Applying for benefits, such as Medicaid

•   Making investment decisions on your behalf

•   Managing any properties you own

A medical power of attorney (also sometimes referred to as a healthcare proxy) is responsible for:

•   Choosing which doctors or care providers you see

•   Deciding what type of medical care you receive

•   Will advocate if there are disagreements about your care

It’s not uncommon for one person to be designated as both a financial and medical power of attorney, but they don’t have to be the same person. It often provides tremendous peace of mind to know you have designated who will look after your best interests in the situations outlined above.

11. Funeral Wishes

Okay, take a deep breath for this one. It may sound morbid at first, but wouldn’t you want your earthly remains and any celebration of your life to reflect your wishes? So it can make sense to spell out what you want to happen to your body (say, burial, cremation, organ donation).

You can also detail funeral wishes. This typically includes things like what type of music you want to be played or passages to be read, and you can even specify that you want charitable donations instead of flowers.

Whatever you decide, just make sure you communicate your wishes. Unlike other things on this list, there isn’t a formal, legal document you need to sign, but you can usually include your wishes somewhere in your will.

12. Speak with an Estate Planner

Now that you’ve read almost all of this estate planning checklist, you should still consider getting some skilled guidance. Even if you’re completely comfortable writing up legal documents, it’s a good idea to visit an estate planner to make sure you’ve covered all of your bases. He or she may have recommendations for you that can save everyone money and better protect your beneficiaries.

Recommended: Estate Planning 101: The Basics of Estate Planning

The Takeaway

While it can be a difficult topic to think about, estate planning takes time and patience. If you have children, dependents, or a spouse, clear up a weekend and do it as soon as possible. Life happens fast even in the best of circumstances

Estate Planning Made Easier: SoFi and Trust & Will Partnership

Now that you know the steps involved, here’s a super-simple way to approach some of these to-do’s: with a digital estate planning partner. No in-person sales pitches or long phone calls required! SoFi has joined forces with Trust & Will*, a leading provider, and offers a 10% discount to help you purchase Guardian, Will, or Trust-based estate plans.

Interested in the easy and reliable route to estate planning? Check out what’s offered by SoFi in partnership with Trust & Will.

Photo credit: iStock/Kerkez


*Trust & Will, a leading digital estate planning platform, is offering a 10% discount specifically for SoFi members. No promo code required. The 10% discount is automatically applied at checkout to the initial purchase of any Guardian, Will, or Trust-based estate plan.
SoFi member benefits are provided by third parties, not by SoFi or its affiliates. Providers pay royalty fees to SoFi for the user of its intellectual property. These fees are used for the general purposes of SoFi. Some provider offers are subject to change and may have restrictions. Please contact the provider directly for details.
Trust & Will 961 West Laurel Street San Diego, CA 92101 United States

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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How to Read a Car Insurance Declarations Page

How to Read a Car Insurance Declaration Page

Having a copy of your car insurance declaration page is important because it offers an overview of your car insurance policy. Provided by your insurance company, your auto insurance declaration page can help you understand how you are (and aren’t) covered, among other crucial information — which is why it matters to know how you read yours.

In this article, we’ll walk you through how to read a car insurance declaration page, and also explain how to get an insurance declaration page.

What Is an Insurance Declaration Page?

You can think of your automobile insurance declaration page as a summary of your overall policy, containing key information about your coverage, including which vehicles are covered and how to contact your car insurance agent, among other essential pieces of information. (You may hear this summary referred to as a “dec page” for short.)

The information detailed in your dec page is important for each insured driver to have on hand. If you’re involved in an accident or otherwise need to file a claim or contact your agent, this page can guide you through who to contact and what coverages you have. It can also help if you decide to compare policies to see if you’ve got the best deal for the premiums you’re paying.

Sample Car Insurance Declaration Page

Elements of your auto insurance declaration page will typically include the following:

•   Contact information

•   Loss payee (lender/lessor)

•   Policy number and coverage dates

•   Premium amounts

•   Insured drivers

•   Vehicle information

•   Coverages

•   Limits

•   Discounts

•   Deductibles

Here’s more about each.

Contact Information

This includes contact information for your insurance agent as well as your own name, address and phone number.

Loss Payee

This will list any other party with an interest in the vehicle, typically the lender if you’ve financed or the lessor if you’ve leased the vehicle.

Policy Number and Coverage Dates

Just like with your mortgage, credit card account, car loan and so forth, your auto insurance policy comes with a unique account number so that coverage specifics can be accessed when needed. The insurance policy will also have a beginning and end date, perhaps for a six-month period that can then be automatically renewed, and those dates will appear on the declaration page, allowing you to ensure that you have the current version on hand.

Premium Amounts

This page will also list your current premium amount so you know how much to pay (or how much will be automatically deducted from your account). If the declaration page is for a six-month term, it may show an amount of $660 — and, if the agent accepts quarterly payments, then that would be half of that amount: $660 for six months divided by two, which amounts to $330 for three months. If payments are broken down into monthly ones, that would be $660 divided by six, which comes out to a monthly payment of $110.

Insured Drivers

If only one person is on the policy, then this section is pretty simple: their name will be listed as the insured driver. If multiple people are covered on the policy, then all of the household drivers would be listed by name. A person must be added to and listed on the policy before they can be covered by the insurance; if they’re removed from the policy, an updated auto insurance declaration page should be issued without their name.

Vehicle Information

If only one vehicle is insured under this policy then, again, this section is pretty straightforward. It will include the year, make, model and vehicle identification number (VIN) for the covered vehicle. If multiple household vehicles are covered, information will be listed about each one.

Recommended: How Does Car Insurance Work?

Discover real-time vehicle values with Auto Tracker.¹

Now you can instantly monitor vehicle prices in this unprecedented market—to help you make smart money moves.


Coverages

The automobile insurance declaration page will list the types of coverage included on the auto policy as well as the dollar amounts associated with them. Categories can include:

•   Bodily injury: This covers costs if you cause injuries to other people through an auto accident.

•   Property damage: This covers damage to another person’s car or property (such as a fence or building) if you’re at fault in an auto accident. It can also cover costs for the removal of trees, signs, and other debris as needed after an accident.

•   Medical coverage: This covers medical payments and lost wages if you or a passenger gets injured in the accident. It can also cover funeral costs.

•   Uninsured/underinsured motorist bodily injury: If the other person in the accident isn’t insured or doesn’t have enough insurance to cover the damages incurred, this will kick in to help pay for repairs and other costs.

Limits

For each type of coverage listed, there will be limits — sometimes per person and other times per incident. In all but one state, liability insurance is required, although laws vary regarding the amounts needed. Some states will require bodily injury and property damage liability, while others may also require uninsured motorist coverage or personal injury protection.

Note that these state requirements list the minimum required, not necessarily how much auto insurance you may really need in case of an accident. If you have a loan on the car, your lender may require comprehensive and collision coverage, even though your state laws don’t require them.

Recommended: 5 Steps to Switching Your Car Insurance

Discounts

You may receive discounts on your policy, perhaps because of vehicle features (anti-lock brakes or stability control, for example) or because of your driving history. These should be listed on your declaration page along with the vehicles they apply to. Your insurance agent may provide multiple car discounts and/or discounts if you also have a homeowners policy with them, as two more examples.

Deductibles

Deductible specifics should be listed on the auto insurance declaration page as well. The deductible (an important auto insurance term to know) is the amount you’d be required to pay out of pocket before your insurance policy kicks in to pay the rest, subject to policy limits.

Coverage types, such as collision, personal injury, and uninsured motorist, can each have their own deductibles — perhaps $500 or $1,000 apiece. In general, a low deductible policy comes with higher premiums, while a high deductible generally has lower premiums.

How to Get Your Insurance Declaration Page

When you buy a new car insurance policy or change a current one, you should receive a copy of your new or updated automobile declaration insurance page. If you can’t find your copy, you can often download one from your insurance agent’s website or through their mobile app.

If the website doesn’t have that feature or you don’t want to go that route, there are other options for how to get an insurance declaration page. In that case, you could contact your agent for another copy, which could be a hard copy or a digital one.

Recommended: How to Get Car insurance in 5 Simple Steps

The Takeaway

The auto insurance declaration page serves as a summary of your policy, including coverages, premiums, covered vehicles, deductibles, and more. Knowing how to read yours will allow you to know how much you’re protected in case of an accident and who to contact if you need to talk to the insurer. It makes sense to have a current copy of your declaration insurance page in your records where it’s easily accessible.

Additionally, your auto insurance declaration can be helpful if you want to shop around for auto insurance rates. To help you compare auto insurance rates and policies, SoFi has partnered with Gabi to help you quickly and easily make an apples-to-apples comparison against the policy you currently have. Simply share your current policy information and then Gabi will show you rates from insurers in the network.


Photo credit: iStock/Drazen_

SoFi’s Relay tool offers users the ability to connect both in-house accounts and external accounts using Plaid, Inc’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
¹SoFi’s Relay tool offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc’s service. Vehicle Identification Number is confirmed by LexisNexis and car values are provided by J.D. Power. Auto Tracker is provided on an “as-is, as-available” basis with all faults and defects, with no warranty, express or implied. The values shown on this page are a rough estimate based on your car’s year, make, and model, but don’t take into account things such as your mileage, accident history, or car condition.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

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What Is Supplemental Life Insurance?

What Is Supplemental Life Insurance?

Supplemental life insurance is typically an additional policy that you can purchase to augment the group life insurance policy obtained via your employer.

These policies can provide extra peace of mind when it comes to protecting your loved ones, but is more insurance always better? You may wonder whether purchasing this kind of policy is a good idea or not worth the added expense. Let’s take a closer look to see whether supplemental life insurance makes sense for your situation.

Understanding Supplemental Life Insurance

Supplemental life insurance is a policy that’s taken out in addition to basic coverage, which might be term or permanent life insurance. You can often purchase a supplemental policy through an employer to augment what they offer as an employee benefit. However, these policies don’t have to be secured through your job. We’ll learn more about that in a minute.

Some of these policies come with a death benefit, a lump sum payment that goes to the beneficiaries you’ve named (the loved ones who will inherit the money). Others may be a different kind of policy; say, one that pays funds that are earmarked to pay for funeral expenses. Depending on the details of your life, these add-ons may be an inexpensive way to boost your protection and sense of security.

Do You Need Supplemental Life Insurance?

Deciding whether or not to buy a supplemental policy is a very personal decision. To help figure out the right answer for your situation, it may help to ask yourself and answer a few questions. Let’s consider some of those here.

Does Your Employer Provide Life Insurance?

Because supplemental insurance is meant to enhance the life insurance policies you already have, check to see if your employer offers basic life insurance as a benefit. If so, how much? Many times, employers offering this insurance will provide a multiple of the employee’s current salary. Other times, it’s significantly less: Among employers offering flat-dollar plans, the median amount of group life insurance provided is only $25,000, according to a U.S.

Bureau of Labor Statistics’ 2021 National Compensation Survey. That’s a figure that many people will find too low to provide the kind of protection they’d like.

If you feel you don’t have enough protection, you may want to check out what is offered that could boost your coverage so that in a worst-case scenario, you know your loved ones will have enough money to cover their expenses. Perhaps your employer offers supplemental policies that will get you to the level of life insurance coverage that you desire. Otherwise, you can also look on the open market for primary or supplemental policies.

Have Your Compared Life Insurance Rates?

If you haven’t compared prices of life insurance rates in a while (or ever), you might want to give it a try. Just because an employer offers life insurance, including supplemental coverage, you may not want to buy it. You may discover that you can get enough life insurance through a standard policy without adding a supplemental one. You can quickly get quotes by calling an insurance agent or, to save even more time, from a website that provides them from multiple companies. When looking at the quote that gives you the best coverage for the most affordable premiums, would you still need a supplemental policy? The answer may be no. There’s a good deal of competition in the marketplace and great deals to be found.

Recommended: How to Buy Life Insurance in 9 Steps

How is Your Health?

First, let’s understand that your health rating is a key factor in buying life insurance on the open market. Rates tend to be lower when you are healthier and younger. Health is typically assessed by the insurer asking you questions about your medical status and possibly having you submit to a brief health exam that involves the collection of blood and urine samples.

That said, plenty of life insurance policies require health exams and/or medical records. That said, many insurers also offer lab-free options that don’t require medical exams (although you’ll almost certainly need to answer health-related questions), and these are often the kind employers offer employees. Typically, these policies are for people who fit into certain age groups and other categories in which they’re likely to be healthy. These lab-free policies are often available for up to $1 million.

Now that you know how this works, understand the implications of your health status. If you have an underlying health condition, are a smoker, or have other qualifying factors, you would probably pay more for life insurance if you went shopping on the open market. In these cases, buying a supplemental policy through your job could be a good way to get coverage at a relatively low cost.

Do You Need Portable Coverage?

Before you sign up for a supplemental policy, consider whether it’s portable. “Portability” is your ability to keep certain benefits if you switch your place of employment or leave the workforce entirely — in this case, your life insurance. If you’re thinking about changing jobs or have reason to believe that you may not work at your current employer for much longer, it’s important to know if your life insurance is portable.

How Much Supplemental Life Insurance Should You Buy?

Many financial experts recommend that you carry 10 to 15 times your annual income in life insurance coverage. Your goal is to choose a policy that would replace the income you would have brought in if you weren’t around to provide for your family. So, if you multiply your salary by those numbers and then subtract what you have in your “regular” life insurance policy, that can be a starting point to determine how much supplemental insurance makes sense.

If you make $50,000 a year and multiply by 10 or 12, that’s $500,000 to $600,000 in coverage you want to purchase. (You might want to bump it up a bit to account for inflation.) So, if you have a term life insurance policy for $500,000, you might decide to get a supplemental policy for $200,000.

Now, factor in your outstanding debt. Life insurance payouts can be used to pay them off, including mortgage loans, car loans, student loans, credit cards, and so forth. So, if you have these debts, you can add their outstanding balances up and consider adding those amounts to your life insurance needs. If, for example, these debts total $300,000, you might bump up the supplement policy example above to $500,000.

Recommended: Life Insurance Definitions

Types of Supplemental Life Insurance

We’ve been focusing on one kind of supplemental insurance, a popular option that lets you increase the overall life insurance coverage you own. This kind of policy would pay a lump-sum death benefit to your beneficiaries. If you purchase this, it’s an employee benefit that can increase the amount of coverage that you own (although you may be responsible for part of all of those premiums albeit at a group rate).

But let’s consider some other possibilities that may be offered:

•   Supplemental spouse life insurance. This kind of insurance provides a death benefit if the employee’s spouse dies and may also be called supplemental family life insurance. Employees may also have the option to buy supplemental child life insurance to cover the death of a child or other dependent who qualifies.

•   Accidental death and dismemberment. This provides coverage to your beneficiaries if you are killed or lose physical function in a type of accident that’s covered in the policy. Depending on the kind of work you do or the pastimes you pursue, this may or may not suit your needs. With AD&D insurance, you could receive a benefit, say, you were to lose your eyesight, your hearing, or limb in an accident. But it won’t provide any benefit if you die due to other medical conditions, which are more likely to occur.

•   Final expenses. These policies pay a small benefit (typically between $5,000 and $35,000) to cover end-of-life expenses, such as funeral and burial costs. Some people like to have this kind of coverage, which means your loved ones wouldn’t have to pay out of pocket for these charges.

How Much Coverage Can You Get Through Work?

It’s worthwhile to evaluate what life insurance options are available through your work. Employers may offer lower rates since they get a group insurance rate. Also, it’s also possible that your employer would subsidize (pay part of) your premiums. It’s typically easier to get insured through a group plan. While you may need to answer medical questions, it’s less likely that you’ll need a medical exam for group insurance.

Group plans through your employer, though, are usually not portable. This means that if you leave that employer, the coverage ends and then you’ll need to shop around again — now at an older (although not necessarily old) age and perhaps with new health conditions. Plus, these plans aren’t as customizable as you might get on your own.

How Much Does Supplemental Life Insurance Cost?

If your employer offers this benefit as part of a group policy, the cost may be minimal, especially if the workplace subsidizes the premiums.

Otherwise, it can make sense to get personalized quotes, given that age, gender, health conditions, amount of the policy, term, and more can impact the price. There are online calculators that can help you do the math and see how the numbers add up.

The Takeaway

So, what is supplemental life insurance? It’s a policy that enhances a person’s primary life insurance policy. It helps to ensure that they have enough financial benefit to protect their loved ones if they weren’t there to provide for them. While supplemental policies through one’s employer can be affordable, they still may not deliver the level of coverage you need. Take a close look at your options, and take advantage of the simple online tools that can help you find the kind of policy you need at the right price.

Protection at a Great Price: Life Insurance from SoFi Powered by Ladder

Part of adult life is financial responsibility: Keeping your dollars and sense in good shape and knowing you are providing for your loved ones. But with that, come some important decisions and planning for the big “what-ifs,” such as “What if you weren’t there to provide for your family? How would the mortgage, tuition, and other expenses be paid?” Term life insurance can help give you the security you crave, beyond what’s offered by your employer’s group life insurance and supplemental options. SoFi and Ladder have partnered to provide a quick, easy, and affordable path to term life insurance from $100,000 to $8 million. Eligible applicants seeking up to $3 million don’t require a medical exam. And because we value your time, we’ll provide you with an instant decision when you apply.


Photo credit: iStock/Kemal Yildirim

Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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What Is Indexed Universal Life Insurance (IUL)?

What Is Indexed Universal Life Insurance (IUL)?

When life insurance policy types are listed and described, the focus is usually on two of them: term life and whole life policies. There are more types than those two, though, and they’re typically more complex. They include universal life insurance — and, as a subset, indexed universal life insurance, or IUL. This is an advanced type of policy, where interest on the cash value component is linked to a market index.

In this post, we’ll define IUL, explain how it works, share its pros and cons, and more.

Definition of Indexed Universal Life Insurance (IUL)

First, let’s define universal life insurance. Universal life insurance is a permanent policy, which means that it doesn’t have a set term (say, for 10 or 20 years) and it comes with a cash value. A universal life insurance policy allows policyholders to flexibly adjust premiums and death benefits, though this can have an adverse effect on the policy.

Now, what is IUL? Indexed universal life insurance adds another twist to the equation. This is a type of universal life insurance that doesn’t come with a fixed interest rate. Instead, its growth is tied to a market index. (More about the index soon.)

How Does IUL Work?

After someone buys an IUL policy, they pay premiums, which is similar to other types of life insurance policy structures. Part of that premium covers the insurance costs that, like with other types of life insurance, are based on the insured’s demographics. Remaining fees paid go towards the cash value of policy. Interest paid is calculated in ways that are based on an index (or indexes).

This may sound similar to investing in the stock market, but there’s a key difference. The part of the premium that goes towards the cash value of the policy doesn’t get directly invested in stocks. Instead, the market index(es) is how the interest rate and amount is determined, with a minimum fixed interest rate usually guaranteed.

IULs typically offer policyholders a choice of indexes and allow them to divide the cash value portions of their premiums between fixed and indexed account options.

Explaining the “Index” Feature

A market index represents a broad portfolio of investments with the use of weighted average mathematics to come up with the index figure, which then plays a central role in the amount of interest paid. The three most commonly used market indexes in the United States are the Dow Jones, the S&P 500 and the Nasdaq Composite.

Note that funds invested for the cash portion of the insurance policy do not need to be invested in the index used to calculate the interest. Many times, insurers invest these dollars in bonds rather than stocks.

Benefits and Drawbacks of IUL Insurance

Like other types of life insurance policies, indexed universal life insurance comes with pros and cons. Here is an overview of the benefits and drawbacks of IUL.

Benefits of IUL Insurance

Benefits include:

•   There’s a death benefit for beneficiaries, as well as the cash value of the policy.

•   Withdrawals can be tax-free up to the amount of premiums paid.

•   Premiums are flexible — you can pay different amounts each month as long as it’s enough to cover fees and doesn’t go beyond an IRS limit.

•   Gains are locked in each year, which means you can’t lose the previous years’ gains, though if the market is down the following year it can decrease unless the policy has a built-in floor.

•   Because of the annual reset feature, you never need to make up any losses from prior years.

•   No mandatory distributions exist.

•   You can explore your tax benefits with your accountant or other financial advisor, and they may be significant for your situation.

•   You can borrow against this policy and, if you do, you typically won’t face negative tax consequences.

Recommended: Life Insurance Definitions

Cons of IUL Insurance

Challenges include:

•   An IUL is complicated and, to get the most benefits from this policy, you’ll need to understand how to maximize its value.

•   Although you can pay a minimal premium amount when you want, this can have a negative overall effect on the policy’s cash value.

•   Because the cost for the insurance portion depends on your rating, how much is insured and your age, the cost will go up over the years as you get older.

•   Although the rate is based on an index, policies come with a cap. So, during high index years, you likely won’t realize the full benefit because of this cap. On the flipside, however, many policies also have built-in floors to offset the cap.

•   Fees can take a big chunk out of the policy, causing you to lose much of its value.

•   If you don’t keep the policy in force, you may lose the death benefit (which is true of other types of policies), along with the extra money paid into the premiums.

Alternatives to IUL Insurance

Whether you’re not sold on IUL insurance or simply want to know what your other life insurance options are, here are some of the alternatives to indexed universal life insurance:

•   Adjustable life insurance: This combines aspects of term life insurance with whole life and provides policyholders with the flexibility to adjust the policy’s amount, term premiums and more. Adjustable life policies also come with a cash value component. A key benefit of adjustable life insurance is that you can make adjustments to your policy without the need to cancel the current policy or buy a new one.

•   Variable universal life insurance: Variable universal life is similar to IUL, as it is a permanent life insurance policy that has a cash value and flexible premiums. The investment portion comes with subaccounts and can resemble investing in mutual funds. When the market is doing well, this can benefit the policyholder, but when it’s not, significant losses can occur.

•   Standard universal life insurance: Then, of course, there are universal life insurance policies. These come with a fixed interest rate rather than one tied to an index.

•   Whole life insurance: Additionally, there’s the more basic whole life insurance policy with standard premiums. There is also a guaranteed death benefit and a cash value component.

•   Term life insurance: Then, life insurance at its simplest: term life insurance policies. These don’t come with cash value components or any real bells and whistles. These policies have a term limit (perhaps 10 to 20 years) and are more straightforward and affordable than other options, coming with a death benefit to beneficiaries when the covered individual dies while the policy is paid up and in force.

•   Current assumption whole life insurance: Another type of cash value insurance is called current assumption whole life (CAWL), and it has similarities to universal life insurance policies. Premiums are fixed for a certain period of time and, on predetermined dates, premiums are recalculated (and perhaps the death benefit is, as well). Plus, interest is handled in a way that’s similar to universal life.

Recommended: How to Buy Life Insurance in 9 Steps

Is IUL Insurance Right for Me?

By comparing this overview of indexed universal life insurance with, say, term or whole life insurance, you can see that IUL insurance is quite complex. If, though, you’re earning a high income or want to explore long-term investment opportunities, it can make sense to consider whether the tax benefits associated with an IUL would be worthwhile.

For those who do consider moving forward with exploring indexed universal life insurance, it’s important to compare its pros or cons against those of other types of life insurance. Also take the time to research and compare different life insurance policies.

The Takeaway

Although the question of “What is IUL?” is quite short, the answer isn’t. If this type of policy interests you, consider exploring it in more depth to ensure that you’re clear about its complexities.

At Lantern by SoFi, we make life insurance easy to understand and quick to set up. You can conveniently get a quote for a term life insurance policy and apply in just minutes. You can then benefit from flexible coverage for 10 to 30 years, adjustable at any time, in amounts from $100,000 to $8 million.


Photo credit: iStock/DragonImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
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How Much Does It Cost to Make a Will?

How Much Does It Cost to Make a Will?

With costs as low as $10, making a will doesn’t have to be expensive, but you may want to spend more to get exactly what you need. Granted, the prospect of writing a will can feel boring, morbid, and as if it will be a big drain of time and money. While there’s no doubt that thinking about a world without you on it isn’t “fun,” the peace of mind that people can obtain from making a will, the right will, can be invaluable. Whether you choose to go with an online template that will guide you through the how-to’s of creating a will or work with an attorney, it’s important to know your options. Let’s dive into that now and see how much making a will costs and which approach is best for you.

How Much Does it Cost to Make a Will?

The cost of a will varies from free to thousands of dollars, depending on whether you do it yourself or work with an attorney. Some people with a fairly straightforward situation (basic assets, one child) may find that an online template provides everything they need at a low cost. In general, however, people with high-net-worth or a complex personal situation, such as needing to provide for a disabled family member, may find it advantageous to work with an attorney.

You may wonder if you need a template at all. Can’t you just take pen to paper to share your wishes? In some states, the answer is yes: A handwritten will is legal. But there are good reasons to not write up a will on a piece of notebook paper. Not only can these take longer to go through probate — a legal process that vets the validity of a will — but a template may help make sure all bases are covered and legally valid.

There are templates online that are free, but some that are state-specific and go into greater depth (say, by guiding you through more questions about your situation) may cost from $40 up to over a hundred dollars.

If you work with an attorney, you may pay $1,000 or more to create a will. But working with an attorney may be beneficial if you have a complex situation. For example, an attorney can help you create a trust, which can be one way to avoid probate and may provide tax advantages for your heirs. They may also have recommendations for the most tax-advantageous way to set up a will and can also answer any questions that may come up as you make the will.

Recommended: How To Make a Will: 7 Steps

Regardless of how you create a will, it’s also important to ensure that your will is legal in your state. This may mean having the will notarized or witnessed when you sign. It can also be a good idea to make several copies of the will, and let your executor know where the will can be found.

You also may need to update your will. You can do this via a codicil (this is akin to a PS to your will), but in many cases, it may make sense to create an entirely new will to avoid confusion. You may consider updating or redrafting your will whenever a major life event occurs, such as marriage, divorce, or the birth of a new child. If you’re working with a lawyer, ask them how they will handle potential changes and how much they will charge.

The Cost to Have a Lawyer Write a Will

Having a lawyer write a will may be the most expensive option at $1,000 or more depending on where you live and the complexity of the will. However, this path can have its benefits.

Creating an Estate Plan

Working with a lawyer can ensure you cover all bases and potentially create an estate plan. This can maximize tax-savings opportunities for your heirs. As part of this, a lawyer can be helpful in setting up a trust. A trust can be a tax-advantageous way to distribute assets upon your death and help avoid the possibly long and winding process of probate.

Recommended: Estate Planning 101: The Basics of Estate Planning

Negotiating a Large or Complicated Estate

You also may want a lawyer if you have a large or complicated estate, with a variety of assets, which could be investments, real estate and the like. Also, if you have a complicated family situation, a lawyer can be very helpful in creating a will that addresses these situations. In this case, scenarios include divorce, remarriage, step-children, or complex (possibly contentious) relationships.

Developing End of Life Documents

When drawing up a will, a lawyer also can make sure that you have all end-of-life documents in place. While “will” can be used as a catchall term for end-of-life documents and directives, other important documents can include:

•   A medical power of attorney

•   A living will or advanced healthcare directive

•   Do-not-resuscitate orders

All of the above documents reflect what would happen if you were no longer able to advocate for yourself and needed someone to make medical decisions for you.

Before you work with a lawyer, make sure you’re clear on the fee structure: Will they charge by the hour? How much will it cost to update things in the future? Is there anything you can do on your own to help save money?

Cost Of Writing A Will Yourself

Online templates range from free to several hundred dollars, depending on the complexity and the range of documents provided. Online templates can help guide you through itemizing your assets and can be simple to update if necessary. Here are some details to note:

Online Templates Can Offer a Speed Advantage

Online templates may advertise that wills can be completed in 15 minutes or less. This can be true as long as you have relevant information at your fingertips. Prior to beginning a will (either online or with a pro), it can be helpful to itemize assets and discuss guardianship and executor plans with the people you hope to name prior to starting. This will make the process run more smoothly.

Online Templates May Need Witnessing

Once an online template is filled out, it will likely need to be signed and witnessed to be made legal. Keep this in mind: If you are thinking you can complete your will 100% online and don’t need to leave your home, you may be in for a surprise.

Some online services offer attorney services for an additional cost. This can be a hybrid option that allows you to have a lawyer answer any specific questions while doing the majority of the work yourself.

Recommended: What Happens If You Die Without A Will?

What’s the Difference Between a Trust and a Will?

You may see the terms trust and will used interchangeably. That’s wrong; a trust is not a will! A trust is a customized estate planning tool that can be helpful to heirs in addition to a will. If you hold assets such as real estate or have a positive net worth, a trust may make sense.

A trust can help your heirs:

•   Avoid probate, the legal (and sometimes lengthy) process in which property is distributed

•   Potentially limit tax implication of any gifts or inheritances

Trusts can be complex, but a fairly simple trust can be created through online templates. Having a trust can help ensure that your assets not only go to the people you intend them to go to, but that your heirs are provided for exactly in the way you intended. The time spent making the trust can pay off in peace of mind, both for you right now and for your heirs in the future.

Recommended: What Is A Trust Fund?

Does a Will Need to be Notarized?

You’ve taken the time, created a will, and printed it out. You’re done, right? Not so fast! A will usually does need to be signed and watched by a witness.

What’s more, while a will does not always need to be notarized to be valid, it may be in you and your beneficiaries’ best interests to do so. When a will is notarized, it is considered “self-proving,” which helps confirm that you had the mental capacity to create the will and were not under any duress. It proves the validity of the document and therefore can help avoid probate. Notarizing a will is typically a fairly minor expense of up to $15.

While it can be tempting to put off the notarization process (we know, it can be a hassle to find a notary nearby), getting it done immediately ensures that there are no loose ends if the worst were to happen unexpectedly. It can also be a good idea to make sure the will is printed out and put in a safe place, like a bank safe, and that your executor knows where to find it.

What Should You Never Put In a Will?

There are some things you want to sidestep when creating a will. Here are some considerations that can make the probate process more difficult.

•   Certain types of property, including property owned jointly, life insurance, or other accounts with a beneficiary already named.

•   Specific funeral or end of life wishes. The will may not be read until weeks or months after death.

•   “Rules” about who gets what. A will is not the place to put limitations on gifts, such as money only being available if someone were to marry or turn a certain age.

•   Providing money to pets. However, you can set up a trust to ensure that a pet is provided for.

•   Provisions for taking care of a dependent beneficiary. These kinds of long-term care needs can also best be set up in a trust.

In short, a will can’t cover all the what-ifs, but in many cases, a trust can do so. If you’re not sure how to appropriately manage your estate, consider consulting with a lawyer.

The Takeaway

Creating a will does not need to be expensive or time-consuming to be valid. While a trust may make sense for complex needs or if you have a positive net worth, having a will drawn up in the short term can cover your bases, ensure guardianship wishes are met if you have kids, and provide peace of mind now and in the future. Whether you spend $10 or over a thousand dollars creating one, if you have assets and/or dependents, now is a good time to act!

Protection You Can Trust from SoFi

Wills and estate planning are important steps in managing your financial and legal life. But while you’re thinking about these topics, why not also make sure you are protecting yourself and your loved ones in other ways? SoFi works with some top-notch, reliable partners to bring you auto, homeowners, renters, and life insurance policies. Come take a look at how easy and affordable we’ve made these.


Photo credit: iStock/fizkes

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
This article is not intended to be legal advice. Please consult an attorney for advice.
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SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

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