Life Insurance as an Estate Planning Tool
Among the many different ways in which a person can plan his estate effectively, life insurance often gets little consideration. However, with the right kind of policy and coverage, a life insurance policy can add considerably to your estate plan. A College Station estate planning lawyer has the experience and knowledge to help you put together a strong estate plan including life insurance.
Types of Life Insurance
Life insurance is offered in many kinds of packages, but most boil down to two basic types, term life and whole life. A term life policy is one that covers the insured for a specific period of time, and premiums are paid either monthly or annually. A whole life policy remains effective as long as the premiums are paid, and a portion of the policy value is invested to cover the premiums. In essence, whole life is permanent, while term life is temporary, although it may be renewed.
Advantages of Life Insurance in Your Estate Plan
Life insurance can be very useful in rounding out your estate plan so that your heirs are well cared for. The life insurance benefits do not pass through probate, and so they can become available to beneficiaries relatively quickly after your death. Among the other benefits of life insurance to your beneficiaries are:
- It can pay off debts and provide a lump sum of cash.
- It can help your family maintain the lifestyle to which they are accustomed by replacing some of your income.
- It can help keep your family business in operation.
- It can provide cash after your death to pay for administrative costs and taxes.
- If you have kids from a previous marriage, the proceeds from the insurance can be left to them so that they are not left out when the rest of your estate goes to your current spouse.
- If the coverage pays out a large sum upon your death, this can be a disadvantage, because when added to your total estate it can put its value over the limit so that your beneficiaries owe federal estate taxes. One way to avoid this is to create an insurance trust.
We Can Help You with Your Estate Planning Needs
Estate planning is important regardless of your age, especially if you have a spouse and children. Call a College Station estate planning attorney today to arrange a consultation at Peterson Law Group: 979-703-7014 or 936-337-4681.