Why Insurance is a Must-Have Element of Estate Planning
You probably already know insurance is something you should have in case of unforeseen events. But many do not realize that when it comes to estate planning, there are different types of insurance—from life insurance to long-term care insurance—that can help manage the distribution of your assets in the way you see fit. It may also help prevent lengthy legal processes.
Insurance provides some financial support for your loved ones, which might cover estate taxes, debts and other expenses. Including insurance in your estate plan gives you confidence that you’ve provided a means of support for those in your life, even after you are gone.
Insurance Offers Several Benefits When Estate Planning
Insurance is one major aspect of estate planning that offers several benefits to policyholders and their loved ones.
The Goal of Financial Security Managed With Insurance
Everyone has financial goals, and insurance may help protect your assets and ensure proper distribution according to your wishes. For example, in an unforeseen event, once your insurance kicks in, your family members may be able to access funds to cover expenses. Insurance can lessen the burden on your loved ones for funeral costs, medical bills, outstanding debt and any other expenses.
Insurance Simplifies the Distribution of Assets
The next major benefit insurance provides in estate planning is simplifying the distribution of assets to beneficiaries. It can also help avoid the hassles associated with lengthy and stressful probate processes.
Business Owners May Use Insurance for Succession Plans
Insurance may help business owners establish succession plans. If you're a business owner, you may use insurance to fund buy-sell agreements, key-person insurance and other arrangements that might help continue your business. This provides financial management for the family and manages the business's legacy and reputation.
Types of Insurance to Consider for Estate Planning
In addition to creating a will, trusts and other legal documents, consider adding different types of insurance to fortify your estate plan.
Life Insurance
One of the most popular types of insurance is life insurance, and it may be an appropriate option depending on your wants and needs. It provides a lump-sum payment to the designated beneficiaries after the policyholder's death.
Disability Insurance
For those who rely on income from a job to support themselves and their loved ones, disability insurance could be a helpful estate planning option. There are two types of disability insurance: short-term and long-term.
Long-Term Care Insurance
Seniors and individuals with chronic health conditions, who may require ongoing care, may want to consider long-term care insurance. This type of insurance is important because it could help guard your assets you need for long-term care. Even better, explore a long-term care policy when you’re younger to potentially benefit from lower premiums.
Liability Insurance
You might not think you need to plan for potential lawsuit claims of injury, property damage, or negligence, but having liability insurance covers you in case the unexpected happens.
Choosing Appropriate Insurance Policies
If you're thinking about purchasing insurance policies, consider consulting with a qualified financial professional. They can guide you through choosing the right policies for your needs.
Important Disclosures:
The insurance content in this material is for general information and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
This article was prepared by WriterAccess.
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