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The Advantage of Using Life Insurance as an Estate Planning Tool

Published June 23, 2009

Obtaining life insurance is a necessary way to ensure that expenses are covered after the death of a loved one. This is certainly a benefit of any life insurance policy. Another benefit, not often considered, is the benefit to your estate plan.

There are three types of life insurance: whole life, term life and variable life. Whole life does exactly as its name implies, covering you for your entire life as long as premiums are paid. Term life covers you for a specific period of time that is specified by the policy “term.” Variable life insurance has variable returns and a variable investment component that the policy holder, not the insurance company, determines where the appropriate portion of their premium is invested.

Regardless of the type of policy, life insurance benefits are paid directly to the beneficiary in full upon your death. Because of this, your beneficiary receives all assets immediately without having to go to probate court or pay taxes. Also, since the full policy amount is available upon the policy holder’s death, life insurance is a good way to ensure a certain amount of money will be available at any time even if an unfortunate or sudden event should result in unexpected death.  Contact us with questions at 914-684-2100.

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