One of the most common goals in estate planning is ensuring the financial security of loved ones. Planning your legacy means making sure the house is paid off, the kids will have money for college and you are able to provide financial comfort for those left behind. Many individuals mistakenly believe this to be an impossible goal.
An Affordable Legacy
Life insurance policies are an affordable and effective tool when it comes to ensuring that your family and loved ones are taken care of after you are gone and can no longer provide. These policies are easily tailored to your financial and living situation in terms of both cost and payout. For those who may not be familiar with life insurance, policytypes can vary by payment method, period of coverage, and payout method. For instance: policy premiums can be paid in a lump sum or monthly over time, coverage can be in effect for a designated number of years or can last indefinitely, and payouts can include funds to cover long-term care expenses as well as a lump sum payment to your beneficiaries.
Pay for Guaranteed Security
Life insurance policies grant a large cash value payout after a person passes away in exchange for premium payments made throughout the term or existence of the policy. The policy can be taken out to cover a person for ‘term’ of a person’s life such as a decade or cover a person’s ‘whole’ life for as long as they live. The amount paid in premiums will vary based on the type of life insurance policy it is, the health and age of the policy holder and the value of the policy.
When the policy holder passes on, the death benefit value of the life insurance policy is paid to the beneficiary that was designated ahead of time. This payout avoids probate proceedings and is not subject to probate laws. Because the value of the life insurance policy does not go through the probate process, it is a much faster and more efficient way to ensure that your loved ones whom you have designated to be the beneficiaries get the money. These funds can be used to cover immediate costs as well as provide financial security for the future.
One of the biggest benefits of life insurance is that unlike other inheritances, retirement accounts or investments, the value of the life insurance proceeds are not included in a person’s gross income. This means that the proceeds of a life insurance policy are essentially tax-free. This tax-free status puts the proceeds from a life insurance policy a step above almost every form of asset transfer. Given health and proper planning, you may be able to create wealth for your loved ones.
A Team of Experts
Estate planning and financial planning go hand in hand. Lawyers may not be in the business of selling life insurance and other financial products, but a proper estate plan often includes them. Directing their clients to professionals who can assist in the financial planning aspects of their estate is an important role that your estate planning attorney will play.