Using Life Insurance As Part Of Your Estate Plan
Depending on your age and family circumstances, life insurance can play a major role in your estate plan. Two common types of life insurance are term and permanent. With term life insurance, you purchase a policy for a specific number of years. If you die within those set years, there is a death benefit.
Permanent offers coverage for life. If you die with permanent life insurance, there is a death benefit; plus, your policy builds a cash value. Permanent life insurance has different types, such as “Whole Life,” “universal life,” “variable life,” and “variable universal life.”
Life insurance can be helpful if you have young children because it can make up for lost income and pay for any educational expenses. In a situation like this, term life insurance may be a good option.
If you are retired or retiring soon, you may find yourself no longer needing life insurance. This is because your spouse or adult children may not lose any income when you pass away. In addition, your premium payments will likely be better spent on other things. On the other hand, it’s becoming more common for people to carry debt into their retirement. Because of this, it may be beneficial to have life insurance to pay off your debt after your passing. It can also be used for paying off a remaining mortgage.
If you have permanent life insurance, the cash value may be beneficial in the long run when it comes to retirement. The cash value can be used as income for retirees or even to pay for long-term care. If you’re concerned about costs associated with long-term care, you may want a hybrid policy covering long-term care and a life insurance policy. You may also want to look at Medicaid Planning to cover the high costs of future nursing home care.
Since life insurance does not pass through probate court, it can be used for heirs that need funds right away. Probate court can take months or years to complete, and not all heirs can wait that long. Life insurance can also pay for your funeral, estate taxes, and other final expenses that may come up.
To make sure you appropriately incorporate life insurance as part of your estate plan, you should consult with an experienced Estate Planning Attorney. Just give us a call at (248) 613-0007 to schedule your initial consultation.