Estate Planning & Life Insurance | What to Know

Estate Planning & Life Insurance | What to Know

When you think about estate planning, you may not consider life insurance. But, life insurance is incredibly important to consider when it comes to creating a complete estate plan. Life insurance will allow you to help ensure that your loved ones are cared for in the future. Life insurance can feel like a big decision to make, so it is important to be educated about your options and speak to an experienced attorney who can help you determine the right plan for you and your family.

What is Life Insurance?

Life insurance policies are contracts with insurance companies. When you purchase a life insurance policy, the insurance company will provide your beneficiaries with a lump-sum payment upon your passing, in exchange for regular premium payments while you are alive. The lump-sum payment is frequently referred to as a “death benefit.”

Are there different types of life insurance?

There are three main types of life insurance. Everyone has a different financial situation, so it is important to pick the plan that best suits your needs. The three main types are as follows:

  • Universal life insurance: Universal life insurance provides the insured individual with lifetime coverage. That being said, generally, universal life insurance policies are rather flexible, meaning in many cases, you can actually raise or lower your premium payment or coverage amounts at various points in your life. That being said, these generally come with higher premium payments than other types of insurance.
  • Term life insurance: Many people who lose potential income during working years will turn to term life insurance for relief. This type of insurance can replace lost income, however, the benefits are paid in one lump-sum, as opposed to regular payments.
  • Whole life insurance: Whole life insurance is permanent life insurance, and it is designed to provide lifetime coverage. That being said, the premiums are generally higher than term life insurance, and are typically fixed payments with a cash value. The cash value works as a savings component, and may accumulate tax-deferred over time. Whole life insurance can help preserve the wealth you plan on transferring to your beneficiaries upon your passing, making it a useful estate planning tool.

If you have any questions or concerns regarding life insurance, your different options, or how to pick the right plan for you, contact our firm today. We understand how stressful it can be to make these choices and we are here to walk you through the process, every step of the way.

Contact our Firm

If you or a loved one needs assistance creating an estate plan and wish to speak with an experienced attorney, contact the Law Office of Andres D. Gil, PLLC today.

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