Are you the parent of a college-bound student? During this exciting time, you’re also charged with making some big decisions, especially when it comes to finances.
That’s why it’s important to make sure your financial house is in order by thinking through life insurance needs and updating legal documents.
Life insurance needs
First and foremost, make sure you have the right level of life insurance coverage.
No one wants to think about the unthinkable, but you might want to increase your own life insurance coverage or obtain coverage for yourself and your student if:
Your current coverage would not be sufficient to meet the surviving spouse’s other financial needs or pay off student loan debt.
You take out a Parent PLUS or home equity loan.
You co-sign with your child on a student loan.
Your current term insurance may soon reach the end of its term.
Legal document needs
Strange as it may sound, if a college student age 18 or older is hospitalized while at school and is unable to communicate, the parents might not automatically have the right to tell doctors and hospital staff what medical procedures to use (or not use).
As legal adults, students over the age of 18 need their own advance medical directives, health care agent form and durable power of attorney for financial management, naming those who could legally act on their behalf.
Also, if the adult student is not able to communicate for an extended period of time, the parents might not be authorized to move funds from the student’s investment accounts.
Below are some key terms and ideas to discuss with an attorney to ensure you’re prepared in the event your child is incapacitated.
Advance medical directive – Allows you and the student to plan health care before being unable to make sound decisions.
Health care agent form – Allows you and the student to appoint another person to make health care decisions if you are unable to communicate them yourself.
Durable power of attorney for financial management – Gives someone the right to make financial decisions on your behalf if you are unable to do so.
Important Action Step:
Consider contacting a qualified legal professional to draft an advanced medical directive and power of attorney documents for healthcare and financial management before your student leaves home. Keep a copy for yourself and make sure to keep a copy on file with the appropriate school authorities.
Leaving for school is a new reality for both children and their families. By taking a few minutes to review your financial and legal situation now, you will be prepared for this new stage of your life.
This article was prepared by Thrivent Financial for use by Tri County Area Financial Representative John Lauer. He has an office at 3821 Main St, in Morgantown PA and can also be reached at 610-286-2986.