Important Estate Planning Documents to Know

Important Estate Planning Documents to Know

For many, a strategy for estate planning is a must-have at any stage in life. This ensures that your wishes on how to handle your wealth, health, and children are carried out after your demise or a medical emergency that leaves you incapacitated.

Having the proper documents in place makes it easier, faster, and less expensive for your wishes to be executed.

Here are the most common — and important — estate planning documents to know about, create, and routinely update throughout your life.

Typical Estate Planning Documents

Last Will and Testament

The foundation of your estate planning checklist is your last will and testament. This legal document essentially lets you list your instructions on what to do with your assets after you die.

Your will also names an executor, who is the individual you choose to carry out your final wishes. It should be someone you trust who can handle major financial responsibilities, since they’ll be tasked with navigating both your family and financial institutions.

When you make a will, you’ll specify who will take possession of your assets that don’t have a beneficiary assigned. You can also outline your funeral preferences and other final wishes.

If you die without a will, the state takes over and names a representative on your behalf to handle the distribution of your property. The court could name your spouse or close family member to handle the job, or it could choose a public trustee if no one agrees to the job.

The probate process takes a long time, and your family typically won’t be able to access any of your accounts until an executor is named. That’s why it’s best to get started on your estate planning documentation as soon as possible.


💡 Quick Tip: We all know it’s good to have a will in place, but who has the time? These days, you can create a complete and customized estate plan online in as little as 15 minutes.

Letter of Intent

A letter of intent is another component of your estate planning checklist that allows you to leave an explanation to your loved ones. You can compose an emotional letter if you want, or stick to information that will make the transition easier for your family.

The letter of intent is a good place to list details like your bank accounts, passwords, and other important information your executor or family members may need. For instance, you may have joint accounts with your spouse. But if you’re the one who manages that money or is responsible for certain shared bills, you can explain how to handle those ongoing expenses moving forward.

Also include the physical locations of important documents and assets, like property titles, jewelry, or art.

Recommended: The Difference Between Will and Estate Planning

Beneficiary and Guardianship Designations

Your will documents should include designations for account beneficiaries and, if applicable, a guardianship for any minor children.

Some financial accounts require that you list a beneficiary; others do not. A standard checking account probably doesn’t require you to list a beneficiary, but you can likely volunteer to add one.

IRAs and life insurance do require you to add a beneficiary, regardless of the size of your account or policy.

While you do need to fill out the paperwork directly with the financial institution, you can also list your beneficiaries in your will documents to make it easier for your executor to access everything. Be sure to update beneficiaries if major life events occur, like divorce, the death of a spouse, or a birth.

Speaking of babies, you also need to designate a guardian for any dependents. You’ll need to include their names and birthdates and explicitly name the person or persons you wish to be their guardian should you die. If you’re in a two-parent household, the guardianship only goes into effect if both parents die.

Each state has its own way of handling minors if you pass away without naming a guardian. The court will likely pick a close family member to serve in the role, but it’s always better to make the decision on your own — especially if you have tense family dynamics.

Recommended: New Parent’s Guide to Setting Up a Will

Advance Medical Directive

An advance medical directive is a way to clarify your health care wishes in case you become medically incapacitated.

As part of this legal document, you can first name a durable power of attorney for health care. This basically hands over decision making to the person of your choice. It’s best to have conversations before any medical issues arise so they understand how you would prefer to move forward in certain health situations.

You can also include instructions for specific treatments in your advance medical directive. In what is known as a living will, you can list your stance on individual treatments and how your health care professionals should move forward in each scenario. For instance, you may include “do not resuscitate” orders or how you’d like organ donation to be handled (if at all).

Check your state laws on how to correctly instate an advance medical directive or living will. It’s also important to provide copies to your doctor and family members so that they have your wishes on hand.

If you are about to undergo a major medical procedure, you may be prompted to fill out an advance medical directive form before it takes place.

Power of Attorney

Another type of legal document to include in your estate planning checklist is power of attorney. It’s similar to a power of attorney for health care, but with much broader impact.

It lets you choose an individual to make all types of decisions on your behalf if you become incapacitated, including financial and living decisions.

You can opt to give someone general power of attorney, and that person will simply act on your behalf moving forward. Or you can grant someone individual power of attorney, which only lets them act on your behalf during specific situations that you include in the legal document.

A power of attorney becomes dissolved in a few situations. First, it automatically goes away if you die and the other directives of your will (including the executor) go into effect. It also automatically ends if you get divorced and your spouse had power of attorney for you.

Alternatively, if the person with power of attorney dies or becomes incapacitated, then they’ll no longer be able to fulfill their duties. A court can also invalidate the power of attorney document.

Just like any other role you assign in your estate planning documents, picking the right person to have power of attorney can have a major effect on your life. It’s best to choose wisely and have open conversations about your wishes if you could no longer take care of yourself.


💡 Quick Tip: It’s recommended that you update your will every 3-5 years, and after any major life event. With online estate planning, changes can be made in just a few minutes — no attorney required.

The Takeaway

Estate planning documents dictate a person’s wishes about how to handle their wealth, health, and children upon their incapacitation or demise. Making an estate plan is a good idea as it can minimize the delays, expense, and loss of privacy of the probate process.

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Create a complete and customized estate plan in as little as 15 minutes.


Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi 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.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
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.

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New Parent's Guide to Setting Up a Will

New Parent’s Guide to Setting Up a Will

Starting a family comes with an entirely new set of responsibilities. One of the most important, yet frequently overlooked, necessities is setting up a will. This crucial document outlines tons of important details should you pass away, including what happens to your child.

Estate planning for parents can be broken down into just a few digestible steps. Here’s everything you need to think about, plus tips on how to organize all of your documents.

Estate Planning for New Parents

1. Draft a Will

About 67% of Americans don’t have a will. Setting up a will can be simpler than it seems. A will is a document that outlines how you want things handled after you pass away, including distribution of assets and how any minor children to be cared for.

While some people with complex investments and multiple properties may want to hire a lawyer for help, younger, healthy individuals can seek out online services that can walk them through the steps to make a will and sometimes have no initial cost.

Then, you can follow the execution instructions, which typically include signing your will in front of eligible witnesses. Check your state’s individual requirements. Sometimes, you must have your will notarized in order to become valid. Many banks and public libraries offer this service for free.

If you’re married, consider drafting a joint will with your spouse. This gives you the ability to plan for different scenarios, like what happens when one spouse passes away versus both passing away at the same time. Remember to regularly update your will whenever a major life change occurs, like having another child or adding new major assets.


💡 Quick Tip: We all know it’s good to have a will in place, but who has the time? These days, you can create a complete and customized estate plan online in as little as 15 minutes.

2. Choose an Executor

When you’re setting up a will, you’ll need to choose an executor. This is the person responsible for handling the legal and logistical aspects of disbursing your assets. They are also responsible for filing any remaining taxes and settling your debts.

Consequently, your executor should be someone you trust and who has the ability to handle the tasks involved. This is especially important when you have young children because the executor’s ability to tie up your finances will impact your kids’ inheritance.

Once you choose an executor, let them know that you’ve chosen them. Give them a quick rundown of what to expect, and also let them know where to find your will and other relevant documents.

3. Name a Guardian

When you start having kids, you also need to name a guardian to care for them if you pass away before they reach legal adulthood. There are a lot of things to consider when making this important decision.

First, think about the potential guardian’s ability to care for children. Are their grandparents too old to take care of them? Does the guardian live far away from other friends and family who could serve as a support system?

Also consider their financial capabilities and their ability to manage any assets you leave to help pay for your kids’ expenses.

Finally, think about your values and who would raise your children in a way that’s similar to your own parenting style. Also realize that your kids will be going through a tough time, so their guardian would ideally be someone whom they trust and would provide emotional comfort.

If you have more than one child, make sure you name a guardian for each one, even if it’s the same person. That means you need to update your will every time you have a new baby. Be as explicit as possible when naming a guardian; for instance, if you pick a sibling and their spouse, name both individuals as coguardians.

4. Set Up the Right Accounts

Some types of accounts may help you pass on your assets without having to pay as much in taxes. It’s an important part of the estate planning process and can help you maximize the amount of money you’re able to pass onto your kids. A trust fund can protect the money from being spent too quickly, either by the guardian or your children themselves.

You can implement safeguards as to how much money can be taken out and when. Even if your kids are of legal age, you can put annual withdrawal limits on the trust to prevent a young adult from overspending. Alternatively, even if you pick a guardian to oversee the emotional wellbeing of your children, that same person may not be the best at handling money. Choosing a trust can limit their spending on behalf of your children as well.

There are many different types of trusts, so you may consider consulting an estate planning attorney to choose the best one for your family’s needs.


💡 Quick Tip: A trust is a customized estate planning tool that can be helpful for your heirs in addition to a will.

5. Designate Beneficiaries

The final step of estate planning for parents is to designate a beneficiary for every account and insurance policy you have. Include bank accounts, retirement and other investment accounts, and life insurance policies.

When choosing beneficiaries, find out how each type of account is taxed for the recipient. Also create a list of all of your account numbers and other pertinent details and include them with your will. This makes it easy for your executor to locate all of your assets. Include debt information as well, like your mortgage and/or auto loan servicer.

You can also update beneficiaries as life changes. For instance, you might initially name your spouse as your life insurance beneficiary. But if they pass away before you, it’s time to update that designation to someone else.

6. Safely Store Your Documents

Once you’ve drafted your will and signed it in accordance with your state’s laws, it’s time to store all of the appropriate estate planning documents to make it easy for your executor and beneficiaries to access.

Lots of documents are now stored online, but you’ll still need to keep your original, signed will in physical form. You can keep it in a fire-proof box at home, or in a safety deposit box at your local bank. Be sure your executor knows where and how to access your documents.

7. Outline Access to Financial Accounts

Remember to keep an up-to-date list of all your financial accounts that need to be taken care of. Bank statements should include the account numbers to make it easy for your executor to find. Also include the location of any valuable items, like art or jewelry.

Finally, it’s helpful to include the contact information for any professionals you work with, like an accountant, financial advisor, and estate attorney. Include insurance policy numbers, loan details, credit card numbers, and any other financial accounts that would need to be closed.

The Takeaway

Estate planning for parents isn’t a one-time event. Get started when you have your first child, but also review your intentions and make changes at least once a year. That way, you always have an up-to-date and comprehensive will that reflects your current financials and family structure.

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Create a complete and customized estate plan in as little as 15 minutes.


Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi 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.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
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.


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.

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.

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Does Everyone Need an Estate Plan?

Does Everyone Need an Estate Plan?

The short answer is, yes, estate planning can be a smart move for everyone.

Though it’s not much fun to think about what will happen to your loved ones after you are gone, doing some estate planning early on, and readjusting it as needed throughout your lifetime, can help you prepare for the future and protect the people you care about.

One of the biggest reasons why is that without an estate plan, any assets you have may not go to the people you would have wanted to have them. And, if you have children, you won’t have a say in who becomes their guardian. Not having an estate plan can also create a lot of legal and administrative headaches for your family members and friends.

Contrary to what many people assume, you don’t have to be old, rich, or have children to benefit from making a financial plan for after you are gone.

Read on to learn what estate planning is all about and what you can do to get started.

What Is an Estate Plan?

Estate planning is deciding in advance and in writing who will get your assets and money after your death or in the event that you become incapacitated.

It can be as simple as designating certain people as your beneficiaries on your financial accounts. Estate planning also typically includes creating a will. It can also include setting up trusts and creating a living will that can be used should you ever become incapacitated.

Your “estate” is simply everything you own — money and assets, including your home and your car — at the time of your death.

Your debts are also part of your estate. Anything you owe on credit cards and loans may have to be paid off first by your estate before any further money or assets are distributed to your heirs.

Estate planning is not entirely about money, though. It may also leave instructions for how your incapacitation or death may be handled. For instance, you may not want to be kept on a life-support system if you were in a coma. You may want to be cremated instead of buried. These instructions can be included in your estate planning.

An estate plan may also include choosing a guardian for your children and any specific wishes regarding how you want them to be raised.


💡 Quick Tip: We all know it’s good to have a will in place, but who has the time? These days, you can create a complete and customized estate plan online in as little as 15 minutes.

The Importance of an Estate Plan

An estate plan can be beneficial no matter what your age, income, assets, or family status. Below are some key reasons why you may want to consider estate planning.

You Decide Where Your Assets Will Go

If you don’t have beneficiaries named in an estate plan, the courts will determine who gets your assets. That might be your closest kin (possibly someone you wouldn’t want to have your inheritance), and if you have none, the state may take those assets.

Likely you have someone who you would prefer to leave assets to, and if not, you can choose a charity.

You Have Children

If you have children, it’s important for you to consider how you want them cared for if you and your spouse were to pass away, and who you would want to be their guardians.

Your estate plan can even outline how you hope to pass on aspects of your life such as religion, education, and other values. You can also set up a trust so that your children receive an inheritance once they are 18.

It Can Help Avoid Legal Headaches

If you have beneficiaries you want to leave your assets to, having an estate plan and/or will can minimize the legal headache your loved ones have to deal with.

Without any kind of estate plan, a probate court may have to determine how assets are divided, and this can take months or years, delaying those assets making it to the people you want to have them.

It Can Help Prevent Family Conflict

Your family members may all get along well, but it’s a good idea to write a will so that things remain harmonious.

Regardless of the size of your estate, some careful estate planning can help prevent your family members from arguing over who gets what, whether it’s a small tiff or a full-on lawsuit.

It Can Ease the Financial Burden of Final Costs

Many people don’t consider planning their own funerals, and that may leave an emotional and financial burden on their loved ones.

A funeral can cost, on average, around $7,900, and a cremation about $6,900. Consider whether your loved ones would be in a financial situation to be able to afford to cover that expense, plus any others involved with your final arrangements.

Taking these final costs into consideration can be a part of your estate plan. You might decide to set aside funds to cover your funeral expenses.

You can do this with a “payable on death” account, which can be set up through your bank and allows the designated beneficiaries to receive the money in the account when you pass away.

Or, you might elect to purchase a prepaid funeral plan, which sends money directly to the funeral home to cover a casket, floral arrangements, service, and other aspects of your funeral. You may want to keep in mind, however, that prepaying for a funeral can lead to a loss of money if the funeral home goes out of business.

What’s Included In an Estate Plan

While your estate plan will be unique to your own situation, there are a few things you might consider including.

A Will

Your will is the actual document that outlines who your beneficiaries are and what they will receive upon your passing. It may also identify a guardian if you have young children.

This is also where you can identify the executor, who will carry out the terms of your will.

Recommended: What Happens If You Die Without a Will?

Life Insurance Policy

Having this policy information with the rest of your estate plan makes it easy for your family to file a claim with your insurance company upon your death.

A Living Will

Death is not the only situation in which you may be unable to make a decision. You may be alive yet incapacitated, and in this scenario it can be difficult for your loved ones to know what you want them to do.

Writing a living will can be highly valuable because it lays out how you want to be treated during your end-of-life care, including specific treatments to take or refrain from taking.

A living will is often combined with a durable power of attorney, a legal document that can allow a surrogate to make decisions on behalf of the incapacitated individual.

Letter of Intent

This letter is directed to your executor, and provides instructions for carrying out your wishes in regards to your will, and possibly also funeral arrangements.

A Trust

If you have a sizable inheritance for your beneficiaries and don’t want them to have access to all the funds all at once, you can establish a trust with rules about how and when they receive the money.

For example, you could stipulate that your children receive a fixed allowance each month until they graduate college or get married, or that they use the money for college.


💡 Quick Tip: A trust is a customized estate planning tool that can be helpful for your heirs in addition to a will.

Key Account Information

You might also consider providing account numbers and passwords for bank accounts, investment accounts, and other important accounts that your family will need access to. This can make life much simpler for your loved ones.

Recommended: What Is the Difference Between Will and Estate Planning?

The Takeaway

Whether you have children and want to ensure they’re taken care of, or you’re single and would like your assets to go to certain people or a charity you care about, it’s wise to have a basic estate plan.

Having a financial plan in place in the event that you pass away or become incapacitated can protect surviving family members from unnecessary financial, legal, and emotional stress.

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Create a complete and customized estate plan in as little as 15 minutes.


Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi 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.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
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.

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Different Types of Insurance Deductibles

Different Types of Insurance Deductibles

Buying insurance coverage helps keep you protected from the full financial fallout of an accident or injury. But even with insurance, you’ll probably still be responsible for some costs when you file a claim.

An insurance deductible is the amount of money the insured party is responsible for at the time of loss or damage: it’s the cost you have to pay before the insurance company pays out its share.

Here’s what you need to know about the different types of insurance deductibles and other insurance-related costs you may face.

What Is a Deductible?

When you buy insurance, you’ll encounter several different costs depending on the type of coverage you’re purchasing. These may include monthly premiums, copays, out-of-pocket maximums, and possibly others.

The vast majority of insurance policies, whether they’re auto, health, or homeowners, carry a deductible. So what is a deductible, and how does it work?

The deductible is a sum of money you, as the insured party, are expected to pay toward a loss. Another way to think about it: It’s the amount the insurance company deducts from the total claim and asks you to pay.

For instance, say you get into a car accident in which you sustain $8,000 worth of damage and you have a $1,000 deductible. When you file your claim, you’ll pay $1,000 toward repairs and the insurance company will cover the remaining $7,000 (or up to whatever limits are laid out in your insurance contract).

Your deductible can be a fixed dollar amount or a percentage, depending on your individual plan and the kind of insurance policy you’re talking about. Homeowners insurance, for instance, is commonly offered with deductibles calculated as a percentage of the property’s total insured value.

It’s important to understand that your deductible is separate from your premium, which is the amount of money you pay each month in order to keep your insurance policy active.

Also remember that you may also be responsible for other insurance-related expenses, like copays or coinsurance, so always read the fine print carefully.


💡 Quick Tip: If you have a mortgage, a homeowners policy may be required by your lender. Surprisingly, unlike auto insurance, there is no legal mandate to carry insurance on your home.

Copay vs Deductible

With certain types of insurance — primarily health insurance products — you may be required to pay a copay each time you go to the doctor’s office or receive a covered service. This copay is separate from your deductible, and, generally, your copay doesn’t count toward your deductible amount.

As with other types of insurance, the health insurance deductible must be paid by the insured person before the insurance company begins its coverage. However, individual health plans may cover certain services, such as regular check-ups, even before the deductible is paid in full.

Here’s an example: Say you twist your ankle and visit your doctor, who orders an MRI. If your copay is $25, you’ll pay $25 at the office before or after you see your physician. If the total cost of the doctor’s care and imaging services is $1,000 and you have a $500 deductible, you may still be responsible for the full $500. Any copays you’ve paid along the way won’t be subtracted from your deductible.

Some plans may carry a coinsurance cost rather than a copay. The two are similar, but not identical. Coinsurance is an amount you pay when you receive a medical service, separate from your deductible. Unlike copays, which are charged at a fixed dollar amount, coinsurance is calculated as a percentage of the total cost of the service. Your plan might even include both copays and coinsurance.

All insurance policies are different, and your individual costs and experience may vary depending on the services you’ve received and the specific coverage you have. You can consult your insurance paperwork or contact your insurer for full details on what’s covered in your plan.

Out-of-Pocket Maximums

Health insurance policies in particular are subject to federally mandated out-of-pocket maximums. This is the highest total dollar amount you’ll have to pay toward covered healthcare over the course of a single year, including both deductibles and copays.

The out-of-pocket maximum does not include the amount you pay toward your monthly premium, however. Nor does it include out-of-network services or services that your plan expressly does not cover.

For 2023, the out-of-pocket maximum for a Marketplace plan can’t be more than $9,100 for an individual or $18,200 for a family. In 2024, that limit rises to $9,450 for an individual or $18,900 for a family. (The maximum is allowed to be lower, however, so consult your plan paperwork for full details.)

Do You Want a High or Low Deductible?

When shopping for insurance coverage, you’ll likely have a range of options to consider, including varying deductible costs. And when it comes to figuring out whether you want a high or low deductible, the answer is: It depends.

Generally speaking, the lower your deductible, the higher your premium will be and vice versa. This makes sense when you think about it. If you have a low deductible, the insurer will have to pay out a higher amount when you incur a loss. So in exchange for the promise of covering most of the costs when a claim is filed, the company expects you to pay more up front in the form of a higher premium.

While choosing a higher deductible can help you save money over time since your monthly premiums will be lower, it also means you’re assuming more risk. If something happens and costs are incurred, you’ll be responsible for a larger share of those expenses.

On the other hand, choosing a lower deductible means you’ll likely pay a higher premium each month. But you’ll also have less to worry about if you do need to file a claim, since the insurance company will cover more of the costs (assuming that all the damages and expenses are covered under your policy).

As with so many other financial matters, what’s right for you comes down to a number of factors, including your risk tolerance, budget, and even your lifestyle. If you participate in extreme sports, for instance, and are at risk for catastrophic injuries, you might want to pick a health insurance policy with a lower deductible and higher premiums.

Recommended: How Much Is Homeowners Insurance?

Zero-Deductible Insurance: Is It a Thing?

You may see ads for zero-deductible insurance policies and wonder if they’re too good to be true. While zero-deductible insurance policies do exist, they usually carry higher premiums than policies that do carry deductibles, and you may also be responsible for a one-time no-deductible fee or waiver.

Furthermore, some insurance coverages are required by state law to carry a minimum deductible, particularly when it comes to auto insurance.

Before you sign up for any kind of insurance coverage, be sure to read the contract thoroughly to ensure you understand what costs you’re responsible for.

Recommended: What Does Auto Insurance Cover?

Types of Deductibles

There are many different types of insurance policies with deductibles on the market. Common ones include:

•   Health insurance deductibles

•   Auto insurance deductibles

•   Homeowners insurance deductibles

•   Renters insurance deductibles

•   Life insurance deductibles

The deductible amount varies by type of insurance, company, and plan, among other factors.


💡 Quick Tip: Online insurance tools allow you to personalize your coverage for homeowners, renters, auto, and life insurance — all with zero paperwork.

The Takeaway

Purchasing insurance is an important — and sometimes legally mandated — step toward protecting yourself from the high costs of personal accidents, property damages, and medical bills. But most policies involve set costs, including deductibles. This is the portion of the claim the insured party is responsible for paying.

Whether you’re comparison shopping or switching from your current plan, it’s important to understand what your deductible will be. Having a full picture of all the costs involved can help you find coverage that fits your life and finances.

When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.

Find affordable auto, life, homeowners, and renters insurance with SoFi Protect.


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.


Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi 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.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
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.

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What is a PPO plan?

What Is a PPO Plan?

A preferred provider organization (PPO) is a type of health care plan that offers lower out-of-pocket costs to members who use doctors and other providers who are part of the plan’s network.

These preferred providers have signed onto the network at a lower negotiated rate than they might charge outside of the network.

PPOs also offer members the flexibility to see providers outside of the plan’s network, although they will most likely pay more in out-of-pocket costs to do so.

To learn more about PPOs, and how this type of plan compares to other health insurance options, read on.

How Does PPO Insurance Work?

When you join a PPO health plan, you’re joining a managed care network that includes primary care doctors, specialists, hospitals, labs, and other healthcare professionals. PPO networks tend to be large and geographically diverse.

If you see a preferred provider, you will likely pay a copay, or you might be responsible for a coinsurance payment (after you meet the plan’s deductible).

While you are free to see any health care provider whether or not they are in the PPO network, if you see a provider outside of the network, you may pay significantly more in out-of-pocket costs. In return for flexibility, large networks, and low in-network cost sharing, PPO plans typically charge higher premiums than many other types of plans.

PPOs are a common, and often a popular, choice for employer-sponsored health insurance.

Recommended: Common Health Insurance Terms & Definitions

What Are the Costs of Going Out of the PPO’s Network?

If you see a provider who is not part of the plan’s network, you will likely be expected to bear more of the cost. PPOs typically use what’s called a “usual, customary and reasonable” (UCR) fee schedule for out-of-network services.

Insurers calculate UCR fees based on what doctors in the area are charging for the same service you were provided.

If your doctor charges more than what your insurance company determines to be usual, customary, and reasonable, you most likely will be charged for the difference between the amount charged for the service and the amount covered by your insurer.

Depending on where you live and the service you received, this difference could be significant. It may also come as a surprise to policyholders who assume their medical costs will be covered and don’t fully understand the distinction between in-network and out-of-network providers.

A good way to avoid surprise charges with a PPO (or any health plan) is to talk to your provider and your insurer before you receive treatment about the total cost and what will be covered.


💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

How PPOs Compare to Other Types of Health Care Plans

PPO plans are most often compared with health maintenance organizations (HMOs), another common type of managed care health plan.

HMOs typically offer lower premiums and out-of-pocket costs than PPOs in exchange for less flexibility.

Unlike a PPO, HMO members typically must choose a primary care physician from the plan’s network of providers. Care from providers out of the HMO network is generally not covered, except in the case of an emergency.

Also unlike a PPO, an HMO’s network of providers is usually confined to a specific local geographic area.

Another key difference between these two types of plans: HMO members typically must first see their primary care doctor to get a referral to a specialist. With PPOs, referrals are not usually required.

PPOs are also often compared to point of service (POS) plans.

POS plans are generally a cross between an HMO and a PPO. As with a PPO, POS members generally pay less for care from network providers, but may also go out of network if they desire (and potentially pay more).

Like an HMO, POS plans require a referral from your primary care doctor to see a specialist.

PPOs (as well as HMOs and POS plans) are very different from high deductible health plans, or HDHPs.

HDHPs charge a high deductible (what you would have to pay for health care costs before insurance coverage kicks in).

This means that you would need to pay for all of your doctor visits and other medical services out of pocket until you meet this high deductible. In return for higher deductibles, these plans usually charge lower premiums than other insurance plans.

You can combine a HDHP with a tax-advantaged health savings account (HSA). Money saved in an HSA can be used to pay for qualified medical expenses.

HDHPs are generally best for relatively healthy people who don’t see doctors frequently or anticipate high medical costs for the coming year.

Recommended: Beginner’s Guide to Health Insurance

What Are the Pros and Cons of PPO Insurance?

As with all health insurance options, PPOs have both advantages and disadvantages. Here are a few to consider.

Advantages of PPOs

•   Flexibility. PPO members typically do not have to see a primary care physician for referrals to other health care providers, and they may see any doctor they choose (though they may pay more for out-of-network providers).

•   Lower costs for in-network care. Out-of-pocket costs, such as copays and coinsurance, for care from in-network providers can be lower than some other types of plans.

•   Large provider networks. PPOs usually include a large number of doctors, specialists, hospitals, labs, and other providers in their networks, spanning across cities and states. As a result, network coverage while traveling or for college student dependents can be easier to access than with more restricted plans.

Disadvantages of PPOs

•   High premiums. In return for flexibility, PPO members can expect to pay higher monthly premiums than they may find with other types of plans.

•   High out-of-pocket costs for out-of-network care. Depending on where you live, the treatment you receive, and how your insurer calculates “usual, customary, and reasonable” fees, you may find you are responsible for a large portion of the bill when you receive care outside of the PPOs network.

•   Might be more insurance than you need. If you rarely see doctors and wouldn’t mind potentially switching doctors, you may be able to save money by going with an HMO or a HDHP.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

PPOs are a popular type of health plan because of the flexibility, ease of use, and wide range of provider choices they offer. PPO networks tend to be large and varied enough to include a patient’s existing doctors. If not, members still have the option of going out-of-network and receiving at least some coverage from a PPO. PPO members pay for this flexibility, however.

PPOs typically come with higher premiums, along with extra costs associated with out-of-network care. That can be prohibitive for many consumers.

Your employer’s benefits department or an experienced insurance agent or broker can help you compare PPOs to other types of health care plans and determine which choice is right for your health care needs and your budget.

Before choosing a plan, it can also be helpful to track your spending for a few months to see how much you are currently spending on medical care. This can help you ballpark costs for the coming year and make it easier to compare plans.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

With SoFi, you can keep tabs on how your money comes and goes.


SoFi Relay offers users the ability to connect both SoFi 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. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. 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 is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

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.

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