Create Your Estate Plan

A Family life insurance plan can provide more than just the comfort of knowing that your family will have money should something happen to you. Many times insurance can be seen as an estate planning tool that protects loved ones for any shortcomings that one was not able to accomplish during their lifetime and in some cases create an estate that can sustain others for a given amount of time. For example, life insurance can allow your surviving family to pay off debts, pay for funeral expenses, and even pay for federal estate taxes.

There are more uses for life insurance than simply paying off debts. As an illustration, some parents have used life insurance as a means of providing financial protection when an adult son or daughter is in the process of taking over their business. How so? By taking the policy out on their son’s or daughter’s life, if anything happens to that son or daughter, his or her death will not affect the business.

It should be noted that there is not just one type of life insurance; in fact, there is term, whole life, universal life, variable life, and adjustable life. Term life insurance provides coverage for a specific amount of time. Whole life insurance gives a death benefit for the entire life of the insured, as well as a tax-deferred build-up of cash values; additionally, it is possible to borrow money from the insurance company, but this is limited to the current cash value of the policy. Both universal life and adjustable life policies offer flexible premiums and adjustable death benefits, as well as favorable tax treatment. Variable life insurance allows you to build cash value that may be invested in separate accounts, leading to higher cash values.

One of the key concerns with estate planning with a life insurance policy is whether a beneficiary of the policy is to receive the proceeds of the policy outright because in most jurisdictions the proceeds pass outside a will or trust if a beneficiary is directly named. Some extra planning can make sure that necessary strings are put on the proceeds if necessary according to goals or other circumstances by naming the estate or trust as a beneficiary.

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