Inheritance Planning: Life Insurance
Life insurance is an expense that many Americans pay throughout the course of their life. When you purchase life insurance, it is imperative that you disclose the existence of your life insurance to your estate planning attorney so that this is something that can be taken into consideration during the planning phase. A key detail of life insurance is who you name as beneficiaries of the policy. Life insurance gives you the flexibility to leave certain aspects of your estate to certain individuals while leaving your life insurance to other people if you so choose.
What is Life Insurance?
Life insurance is considered to be a contract that you have between you and the life insurance company. The policy holder of the contract will be required to make payments each month to maintain the policy with the understanding that if the person who is named as the insured passes away, there will be a payout of funds based on their contract.
It is important to remember that there are distinct types of life insurance policies. There are many people who opt to pay a term life insurance policy during which time they pay a premium for a certain amount of time, usually between 10 and 30 years. A term policy is usually a popular option for a parent who has young children because the monthly payments tend to be more affordable and still provides the same type of protection for their family. However, once the term is up, there is not any cash value associated with the policy.
A whole life policy, on the other hand, does have a cash value associated with it, however the premiums do tend to be higher for this type of policy as it is a policy and an investment that will realistically stay with you for the rest of your life. A good rule of thumb is to speak with an insurance agent to determine which option is best for you depending on your current situation.
Considerations for Estate Planning with Life Insurance
The reality is that although life insurance can be difficult to talk about, there are several benefits of having life insurance. Here are just a few reasons why so many Americans invest in a plan for life insurance monthly:
· Life insurance can cover funeral expenses
Although the ins and outs of financial stress during the lifetime of any person can take its toll, your passing away without a life insurance policy in place can have financial stresses on the loved ones left behind. Having a life insurance policy ensures that your final expenses are covered.
· Leaves behind a monetary legacy
One of the best things about a life insurance policy is that you can leave behind a monetary legacy to your loved ones that you may not have been able to do through the current assets that you have in your estate. Regardless of whether you opt to name your spouse, your children or another individual, these funds are something that will pass tax free to your beneficiaries, so it is important that you plan accordingly.
Review Your Beneficiary Designations with an Estate Planning Attorney Today
Our team of estate planning attorneys understand the impact that life insurance can have on your estate plan. This is one of the reasons why it is so important for you to bring your life insurance documentation with you to your initial consultation. Our attorneys will review the details of your beneficiary designations to ensure that these designations are in line with the goals that you have for your estate plan. Contact our office today to book your appointment with us.
