If you’re like a lot of people your first exposure to life insurance takes place when you are offered it on the job as one of your benefits. If you are young and single at that time you may feel like it is nice to be able to leave your loved ones enough to handle your final expenses, but beyond that it may not seem especially important. However, as you enter different stages of your life and people come to rely on your income, life insurance takes on added significance.
Clearly, when you get married you and your spouse will be pooling your respective incomes in an effort to maintain a particular lifestyle. Should one of these paychecks suddenly vanish the standard of living of the surviving spouse could be jeopardized, and this is the last thing that you need when you’re faced with such a devastating emotional turn of events. Along the same lines, when you have children your coverage must be revisited with their long-term well-being in mind.
In addition to serving as an ideal income replacement vehicle, life insurance is used in estate planning in other ways. One of these would be to balance inheritances. To provide a simple example, suppose your largest financial asset was a business that you owned, and you had two children. For the purposes of this example let’s say that one of the two children worked in the business and understood it thoroughly and the other had embarked on a different career path. To be fair to both of your children you may leave the business to the child who works there and take out a life insurance policy of similar value to the business and make your other child the beneficiary.
Life insurance is a key element in many estate plans, and if you would like to learn more about how to use it to optimal effect, simply arrange for a consultation with an experienced estate planning attorney.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.