Including Life Insurance in Your Estate Planning

No one wants to think about their death in the future, but it's an important exercise to envision the goals you see in your family's future. Many people have plans to enjoy retirement, pay off the mortgage, and send students to college, but with the sudden loss of an income earner, these goals can quickly go out the window. You've worked so hard to build your life and set the foundations for your family- now you should consider how a life insurance policy can supplement your estate planning.

How much money does your family have saved? How many months of paying for their current lifestyle would those savings provide? Likely, your family would struggle to make it after just a few months, or even weeks. There's a simple solution to this problem, and it's known as life insurance. If you're in good health and relatively young, the premium costs for a term life insurance policy are extremely reasonable.

A life insurance policy allows you to determine the face amount of the policy on application. This face amount should be determined after carefully considering what you are attempting to fund for your family in total. For example, income replacement costs should be factored into the equation, as well as the payment for any outstanding debts that you don't want your family to be responsible for. Today's life insurance policies offer extreme flexibility, including universal life insurance policies that can accumulate cash value. This cash value can be used as a savings vehicle for retirement, or it can be borrowed against in the event that you need money immediately.

Term life insurance, on the other hand, does not accumulate cash value. It is, however, the most affordable option for many of today's families. After a defined period, the insurance will renew on an annual basis if the client chooses, but the majority of the time this is cost-prohibitive. This is why term life insurance is an ideal solution for someone in their working years primarily concerned with income replacement or paying off a mortgage. If you expect to outlive the policy and still need a death benefit payout, a universal life insurance policy is a better solution for your needs.

Life insurance should certainly be part of your estate planning. Discuss your with advisor the options for a life insurance policy at your current age. With numerous types of product, you're sure to find something to meet your needs.

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