From our “Ask a Question” Mailbag: Life Insurance Estate Planning
Most Recently Updated August 9, 2018.
“I need life insurance as part of my estate plan to cover the cost of my son’s college tuition and pay off the mortgage on my home in Doylestown. What policy best fits my needs?”
Life Insurance Estate Planning
First, focus on the reasons for why you are purchasing life insurance. Life insurance is an excellent Estate Planning tool, but only if you are clear as to its purpose.
A Proper Estate Plan Incorporates Your Life Insurance.
In your case, life insurance is being purchased to address specific expenses. These costs will either be paid or will diminish over time. If you are alive to pay your son’s tuition checks, then after he graduates that expense will no longer exist. If you are alive to pay down your mortgage, over time the needs for a large sum at your death will diminish or disappear.
Because of this diminishing need, ask your wealth advisor or insurance professional to run numbers on two different types of policies. First, get a quote for a policy that allows you to reduce the coverage over time. Second, get a quote for two policies, so as your needs diminish you can drop one policy. Even though the total amount of insurance will be the same, the premium costs will differ. You can then purchase the policy that best fits your needs at the most reasonable price.
Consider Using an Irrevocable Life Insurance Trust “ILIT.”
Whether you get one or two policies, also consult with your Estate Planning Attorney. Your attorney can advise you about the possibility of having an Irrevocable Life Insurance Trust “ILIT” purchase these policies. Depending on your situation, this trust may provide valuable tax savings and asset protection. The small extra cost might pay big dividends.
More Planning Questions?
Life Insurance Estate Planning is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.
In Conclusion: Life Insurance Estate Planning
I hope that this article was helpful in explaining Life Insurance Estate Planning. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!
Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers. By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!
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