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February 15, 2017

Do You Have a “Day After” Insurance Policy?

By: Cheryl A. Jones, Esq.

InsuranceInsurance is a form of risk management, designed to minimize the loss associated with certain events like flood, fire, accidents, disability, and even death.  Most insurance requires an agent and the payment of premiums.  However, there is a type of insurance which you can take out on your own that costs nothing, but will provide your loved ones with incredible peace of mind, when the “Day After” arises.

What is the “Day After”? It’s the period immediately following some event (medical emergency, incapacity, entrance into a nursing home, or death) which makes you unable to act for yourself.  Here’s how to implement your “Day After” insurance to protect yourself, your family, and your finances:

  1. Get your legal affairs in order now. If you don’t have legal documents in place to allow someone to manage your finances and make health care decisions for you, now’s the time to do so.  Ditto if you don’t have a Will, especially if you have minor children.  You do not want to leave these critical decisions up to someone else to decide.  What if it’s that one family member with the absolute worst judgment that steps up to decide your future nursing home?!
  2. Make a list of your assets and liabilities. Even with the proper legal documents in place, it can still be incredibly difficult for a spouse or loved one to assist you if they don’t know what bank you use, where your checkbook is, what assets are available to provide for your care, and how to access them.  List bank accounts, investment accounts, retirement accounts, real estate, automobiles, boats, life insurance and disability policies, and any other assets that can be used for your benefit. You’ve worked long and hard to make sure that nursing home is the best money can buy, so make sure your loved ones know how to pay for it!
  3. Check the title of your assets and beneficiary designations. If you haven’t checked the beneficiary designations on your life insurance, retirement accounts, and pensions, now is absolutely the time to do so.  Those beneficiary designations cannot be changed once you are gone, and your current spouse will be unhappy if your ex-spouse is still listed as the beneficiary of your life insurance!  Now’s also the time to confirm how your house, bank accounts, CDs, and other assets are owned, and determine who, if anyone, is (or should be) listed as a co-owner.
  4. Make a list of your computer passwords and logins. In this day of online bill paying, you should keep your websites, logins and passwords handy (but secure), just in case a loved one needs to pay those bills on the Day After.  There are plenty of safe ways to store this information, but sometimes the low-tech way (a handwritten list) is the easiest and best way to do this.
  5. Make a list of the important people to contact on the Day After. Compile names and contact information for family members and friends. Add in your insurance agents, financial advisor, accountant, and attorney.  If there is a priest, rabbi, or other spiritual or religious advisor, make sure his/her name is included. Do you have a prepaid funeral, burial plot, or other arrangements? Include that info, as well.  Want to really help out your family? Collect claim forms from life insurance companies, pension benefits, and your IRA or 401(k) custodian, so that things are easier on the Day After.
  6. Write down your wishes. Do you want to be cryogenically frozen until the year 2525? Make sure your family knows.  Do you want your obituary to mention that you were a two-time all-state athlete in high school? Write it down.  Make a “cheat sheet” of the types of this and other important information that you want your family to know on the Day After, especially your thoughts about health care decisions and end-of-life planning.
  7. Make a “Day After” folder. Now that you have all of this important information in place, make sure it’s someplace easy to locate when the time comes.  A safe deposit box isn’t the best location, as it can be difficult to access, especially if you are “inconsiderate” enough to die or become disabled outside of banking hours.  A simple, expandable folder labeled “Day After Insurance” works just fine.  Just be sure to let loved ones know where that folder is located.

Like traditional insurance, “Day After” insurance is simple enough to implement when things are going well – but if you don’t have it in place when you need it, then it’s too late.  Add this to your list of things to do, today.

Cheryl A. Jones is an attorney in the Wealth Preservation Department of PK Law in Towson, MD, who represents a wide variety of clients on matters relating to trusts and estates, probate, elder law, and asset protection. She can be reached at cjones@pklaw.com, or 410-769-6141.