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3 Ways Life Insurance Can Help with Estate Planning

Happy Senior Couple Talking to Consultant

Estate planning is not just for those who plan to retire, or the elderly – this process is a crucial issue for anyone who wants to protect their assets and their loved ones. Life insurance is one of the most effective estate planning tools, no matter the size or value of your estate.

You may be in the process of purchasing a home for your family and have only minimal savings or investment accounts, or you may have a substantial estate with many properties, stock accounts, and valuables. In either case, life insurance is can play a critical role in the distribution of your estate when you pass away, in three important ways:

1. Estate Tax.

The government requires that estate tax be paid within nine months of death. Many people are put in a difficult position financially, as they are forced to sell property and assets to cover the tax bill. Retirement accounts may be decimated to pay taxes, incurring a penalty. A life insurance policy can provide relief, and in many cases, allow families to stay in their homes rather than being forced to sell. Every estate is unique, and estate planning and taxation issues should be managed by an estate planning professional or tax expert. These professionals often recommend purchasing a life insurance policy as part of your estate planning process, or you can put a policy in place with the help of a local insurance agent.

2. Support for your loved ones.

You may have an estate plan, with a will, trust, or other tax-saving vehicles. Even with the most careful planning, your loved ones could be facing financial stress while waiting for probate to be completed. In larger estates, the probate process can take years. The tax-free death benefit provides your loved ones with the income they need in the interim, for any mortgage, the costs of education, and the basics of survival.

3. Protect business assets for your heirs.

If you have established a business, you likely hope to pass it on to your loved ones. “Key-person” life insurance policies can be a vital part of ensuring your hard work and dedication are not lost at your death. These life insurance policies are purchased through the business, naming the company as the beneficiary. This type of life insurance provides the funds the company needs during the time of transition after the death of an owner, partner, or top executive.

Life insurance is a critical part of a comprehensive estate plan. Term life insurance policies are typically affordable for young families, and over time, many policies can be upgraded to a whole life policy, an asset that builds equity over time. To plan for your future, and protect the people you love, meet with one of our local insurance agents about what type of life insurance policy will be most beneficial for you and your budget, no matter your age or the value of your estate. We work closely with our clients to identify the ideal life insurance policies to suit you, your family, or your business interests.

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