Life Insurance As An Estate Planning Tool

Have you considered what will happen with your estate when you die?  An estate refers not only to your land and any buildings or structures on that land but also any money or investments that you leave behind when you go.

Handling these affairs can be a huge burden on your family.  Inventorying your assets, investments, and personal possessions.  Assessing total value.  Handling estate taxes, which often really eat into the overall value of what is left when you’re gone.  If you don’t have an adequate plan for taking care of these things, a lot can go wrong.

The Role Of Life Insurance In Estate Planning 

Here’s where life insurance really fits into estate planning – it’s a matter of convenience and flexibility.
Most estates are comprised of very non-liquid assets.  After all, a quick property sale is almost an oxymoron these days, and a business disassembled fast is never a business disassembled properly.  If your beneficiary’s only option is liquidating your holdings to cover costs, a lack of time and inexperience is very likely to result in poor decisions with a negative impact.

Your life insurance policy, meanwhile, frees up the cash needed to handle these affairs in the most favorable manner possible, preserving the integrity of the properties and removing a huge burden.
It’s a crucial tool for making sure your heirs receive or settle your estate without problem.
The insurance policy can be used for a wide variety of different uses.  Paying taxes.  Continued income and support. Disassembling business interests. Funding retirement. Covering the cost of education for your children.

Circumvent Large Estate Taxes

Another critical issue with estate planning is the estate tax.  Though not a huge concern for smaller estates, those with larger estates should take heed.  The problem arises when beneficiaries face the burden of paying taxes on their inheritances, which are then subject to capital gains tax.

When your net worth is unusually high, they may be completely unable to pay the tax and be left with a very insignificant amount of their inheritance, if anything at all.  This is, of course, not what we have in mind for our beneficiaries when we go.

Offset this effect by taking out a policy with an adequate death benefit so the capital gains and estate tax will be taken care of without your beneficiaries being forced to liquidate and sell assets.

Which Type Of Insurance To Consider

All life insurance policies can be used to make sure your heirs end up with your estate in full.

For some, whole life is a good choice because it is permanent but it comes at a hefty cost and can be cost prohibitive.  Term life, on the other hand, can often found at a much cheaper cost.  Just make sure you’re coverage has a renewable option if you expect to keep coverage going after it’s set to expire so you don’t go unprotected. You might even consider sticking to term with a conversion option to minimize the risk of outliving your insurability. Conversion options allow the policy holder to convert to another type of life insurance.

For more information about how life insurance can best help you, give us a call at 800-301-8113 or visit goldcoastlifeinsurance.com