Why You Should Include Life Insurance In Your Estate Plan

Life insurance may play an integral role in your estate planning, depending on where you are in life. Specifically, life insurance policies provide money to your chosen beneficiaries upon your passing.

Alternatively, the owner of the life insurance plan may choose to direct those funds to a trust or probate estate.

“If insurance proceeds are payable to your estate, they will be distributed as part of your general estate in accordance with the terms of your will or, if you die without a will, according to the applicable state laws of intestate succession,” as explained by the American Bar Association. “If the proceeds are payable to a trust, they will be held and distributed in the same manner as the other trust assets and may be protected from creditors’ claims.”

There are two different types of life insurance that one may purchase:

• Term Insurance: Term insurance often offers the lowest premiums. This type of life insurance plan, however, only provides coverage for a set number of years, the quantity of which you will choose upon enrollment. Some term insurances feature fixed annual premiums whereas others may include fluctuating annual premiums.

Term insurance is frequently purchased by families in order to make up for the loss of income upon the death of a spouse and/or parent.

• Universal Life Insurance: Universal life insurance, also referred to as “whole” life insurance, provides lifelong coverage as opposed to a set policy length or term. While the premium may be higher than that of term insurance, it ultimately accumulates cash value as a means of generating a build-in savings plan. Generally, universal life insurance features a fixed annual premium.

Universal life insurance is commonly considered helpful for those who have retired but retain certain types of debt.

No matter what stage of life you are in, estate planning is also a wise course of action if you wish to secure your assets and ensure your loved ones are provided for after your passing.

To effectively complete the estate planning process, always be sure to contact a trusted attorney, like Eileen Dolaghan with Dolaghan Law. When you work with Dolaghan Law, you’re not alone — Get started today by calling (904) 354-4935.