I work with many high net worth clients and during their annual insurance and financial reviews the question often arises: “I have more than enough money to last me the rest
of my life, my children have great careers and are self-sufficient, why do I still need life insurance?” Obviously, each situation is different and the plan is always customized for
each individual but here are the common reasons people use life insurance as part of their estate plan.
1) There are a number of techniques and estate planning tools that may be utilized to reduce or eliminate federal estate tax, one of these tools is the use of life insurance to provide the cash needed at death to pay federal estate taxes.
2) A trust is another tool used in estate planning and are created for a variety of reasons. In many specific cases, Life Insurance is used to fund the established trusts to meet current or future needs. The most popular times to fund trusts with Life Insurance are in the cases of minor children, incompetent persons, special needs planning, business continuity, or charitable giving.
3) Often times your buying power is multiplied when using life insurance as part of your financial plan. When you purchase life insurance, it’s usually at a discount so your money goes farther when your family needs it most.
4) Immediate access: I have found that it can take weeks or months to gain access to financial accounts when someone passes away and perhaps even longer when the will or trust is contested. This waiting period can cause financial
hardships on loved ones carrying the burdens of these hefty expenses. Life insurance proceeds are usually paid out within days of receiving the required paperwork, allowing loved ones to bridge the gap until access is granted by the
financial institutions.
Article by Jessica Cortes
Photography by Provided
Originally published in Chevy Chase City Lifestyle