My Daughter’s 24; Does She Need Life Insurance?

It’s wise and prudent to examine the need for life insurance, even if your daughter is only 24.  If a tragedy such as death would strike, there are likely final arrangement expenses which average about $7,000, last bills, credit card bills, lease obligations, car payments, and utilities to be paid.  In addition, if your daughter has a child or children, mortgage, or spouse, the need for life insurance is greatly increased.

In general, life insurance is used to create an estate, pay last bills, replace income, fund a buy-sell agreement, pay federal estate taxes, provide an inheritance, equalize inheritances, provide an inheritance for children not in the family business, and fund charitable gifts.

If your 24 year old’s obligations are few, a small policy would be appropriate.  As obligations increase, so should the policy value.

While you’re discussing life insurance with your daughter, be sure to include other estate planning issues in your conversation as well.  Your daughter needs a will, living will, medical power of attorney, financial power of attorney, HIPAA release, and organ donation authorization.

You are no longer legally authorized to make medical or financial decisions for your daughter because she is an adult.  All those who have attained that age of 18 need their own written estate plan.  If your daughter wants to authorize you to make medical or financial decisions, she must sign the appropriate estate planning documents.

Be sure that her estate plan is reviewed every year and updated as needed if she gets married, has a child, moves to a new state, or has a significant change in health or wealth.

In addition, be sure that you know where your daughter keeps her estate planning documents, certificates, life insurance policies, and other important papers.  She should keep an updated list of all of her assets, including online assets and accounts.  You, as a trusted helper, will need her account locations, account numbers, user names, passwords, and PINs.

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Timothy P. Murphy

Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes.

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