Life insurance and estate planning #Lifeinsurance has come a long way since the days when it was known as burial insurance and used mainly to pay for funeral expenses. Today, life insurance is a crucial part of many estate plans. You can use it to leave much-needed income to your survivors, provide for your childrens education, pay off your mortgage, and simplify the transfer of assets. Life insurance can also be used to replace wealth lost due to the expenses and taxes that may follow your death, and to make gifts to charity at relatively little cost to you. To illustrate how life insurance can help you plan your estate wisely, lets compare what happened upon the death of two friends: Frank, who bought life insurance, and Dave, who did not. (Please note that these illustrations are hypothetical.) Life insurance can protect your survivors financially by replacing your lost income Frank bought life insurance to help ensure that his survivors wouldnt suffer financially when he died. When Frank died and his paycheck stopped coming in, his family had enough money to maintain their lifestyle and live comfortably for years to come. And since Franks life insurance proceeds were available very quickly, his family had cash to meet their short-term financial needs. Life insurance proceeds left to a named beneficiary dont pass through the process of probate, so Franks family didnt have to wait until his estate was settled to get the money they needed to pay bills. But Dave didnt buy life insurance, so his family wasnt so lucky. Even though Dave left his assets to his family in his will, those assets couldnt be distributed until after the probate of his estate was complete. Since probate typically takes six months or longer, Daves survivors had none of the financial flexibility that a life insurance policy would have provided in the difficult time following his death. Know more : findmeanadvisor/
Posted on: Thu, 30 Jan 2014 07:32:43 +0000
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