Many people view life insurance as a single item of its own and not part of their overall estate plan. However, your life insurance policy can assist estate planning in several ways. To help you fix any deficits in your estate plan, here are a few ways life insurance can help.
1. To Fill an Immediate Gap. Distributing an estate takes time. Whether it has to go through probate — which can take months — or it's just a matter of actually completing the transfer steps, your family members could be left without funds during the immediate period after your death. A life insurance policy with immediate payout can help fill this gap until the rest of your estate becomes available.
2. To Pay for Final Expenses. Have you planned your funeral or memorial service? If so, make sure you leave not only instructions but also a quick means to pay for the services. Many planners designate a small life insurance policy designed to coincide with expected final costs and cover these so your family isn't scrambling.
3. To Augment a Small Estate. Is your estate not worth as much as you'd like? Then consider augmenting it with one or more life insurance policies. These policies can have one beneficiary, such as your spouse, to help provide more for them. Alternatively, they can be split among many heirs to augment everyone's inheritance as you want.
4. To Prevent Asset Division. If you have assets — such as a home or business interests — you don't want to split up, dividing these among heirs can be impossible. Beat this challenge by using a life insurance policy to make up the difference for heirs who won't receive these assets. This allows you to divide things more evenly and preserve your assets' integrity.
5. To Provide for a Specific Heir. Sometimes, a person wants to provide in specific ways for specific heirs. For instance, a parent may need to leave more money for a child with special needs. Conversely, you may have a family member you want to disinherit, but you also don't want to create strife. Or you may want to be certain your beloved pet is cared for. In these cases, a targeted life insurance policy can direct a specific amount of funds — large or small — to specific persons outside the will.
Want to know more about using policies strategically in your estate planning? Start by meeting with an experienced financial planner in your state today. They can provide further information regarding life insurance.
Share11 October 2021
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