You may rest assured knowing that your life insurance company will pay your designated beneficiaries a sum of money upon your passing. But you may feel even better knowing that you may include your life insurance policy in your estate plan, so that you may help your beneficiaries in covering the inevitable, final expenses that come with your death. Read on to discover how to incorporate your life insurance plan into your estate plan and how a seasoned Putnam County estate planning attorney at the Law Office of Andres D. Gil, PLLC can guide you in doing so.
What are the different types of life insurance to choose from?
First of all, you must establish a life insurance plan that works best for your specific set of circumstances. There are three main types to choose from: term, universal, and whole life insurance.
For one, term life insurance is best if you expect your beneficiaries to receive additional payments from a different source (i.e., savings accounts, investment accounts, etc). This is because this type of insurance may be used to provide coverage at a fixed rate of payments for a limited period (i.e., 10 to 30 years). Upon your passing, your beneficiaries may receive a lump sum payout.
Secondly, universal life insurance is a permanent policy that stays in effect no matter when you pass away. This option may be best if you are looking for flexibility in your plan, and you wish to raise or lower coverage amounts at different stages in your life. But with this flexibility comes higher premium payment rates.
Lastly, whole life insurance similarly offers lifetime coverage. The only difference is that you may expect more predictable premium payment rates and guaranteed cash value accumulation with this option. This is the best choice if you want a standard plan that requires minimal maintenance.
How do I incorporate life insurance into my estate plan?
Once you choose a type of life insurance, you may begin assigning these funds to your estate plan. You may do so in the following ways:
- You may designate a portion of your life insurance payout to cover your final expenses (i.e., your funeral expenses, outstanding debts, and final income expenses).
- You may designate a portion of your life insurance payout to cover your estate taxes.
- You may designate a portion of your life insurance payout to equalize your estate amongst your multiple beneficiaries.
Ensuring you have contributed enough to your life insurance plan to cover these aforementioned expenses requires careful calculations. So you must not hesitate and reach out to a competent Putnam County estate planning attorney as soon as you possibly can. Our team at the Law Office of Andres D. Gil, PLLC will be awaiting your phone call.