Life insurance can be an effective tool in planning an estate. One benefit to having life insurance is that the money from a policy can be used by your survivors to help pay for bills at the time of death, such as funeral costs and taxes.
I think one of the most important considerations in end of life planning is…what will my spouse live on after I’m gone? In today’s world of dual incomes and living on credit, the death of a spouse can be a huge shock to the financial system of a household. If the spouse who is primarily responsible for paying the mortgage and bills dies, how will the surviving spouse continue to live in the marital home? Life insurance can either eliminate those concerns, or help smooth out the transition. If the family’s assets have been used up in medical care bills due to a prolonged illness or nursing home needs, a life insurance policy can help restore the family’s funds.
If done properly, life insurance can also keep assets out of a probate estate, thus limiting the amount of estate tax. As you can see, life insurance can have many beneficial uses, and should not be overlooked when planning.
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