Life Insurance and Estate Planning

Your main goal for getting life insurance should be to protect your beneficiaries financially in the event of your death.

This peace of mind provides a level of security that family members will be taken care of. Due to this, by the time you choose your policy, you can have confidence in the policy's ability to supplement your estate planning strategy.

WHAT IS ESTATE PLANNING?

Proper estate planning allows you to manage your assets while you're alive and plan exactly how you'd like them distributed when you die. Estate planning strategies are different for everyone. Various factors include your estate, age, wealth, health, lifestyle and more.

Some estates require just a simple will to decide how assets will go to the heirs. Complex financial situations call for more specific instructions that a qualified local financial planner or insurance agent can help determine.

Purchasing a life insurance policy as part of your estate planning process will help your beneficiaries maintain a good standard of living without you.

LIFE INSURANCE BENEFITS IN ESTATE PLANNING

If you have a large amount of assets - including a house, vacation property or jewelry - when you die, your beneficiaries may owe estate taxes when settling your estate. They may be saddled with a large tax bill. Work with your local financial planner or insurance agent today to make sure these types of situations do not crop up in the future.

IRREVOCABLE LIFE INSURANCE TRUSTS

An irrevocable life insurance trust is an arrangement that many people employ when transferring their wealth in a tax-friendly way. With this strategy, you buy a life insurance policy for yourself and transfer it to the ILIT. Your heirs are made beneficiaries of the trust and the proceeds of the insurance policy are distributed to them after your death, usually tax-free.

Without an ILIT in place, the death benefit from your policy will be included in your gross estate and could be subject to estate taxes. These are serious financial decisions with real-life ramifications, so make sure you've got all the information needed to make an educated choice on what types of policies and accounts to set up.