Type of Life Insurance In Estate Planning

As we mentioned in previous articles, estate planning is the process of accumulating and disposing wealth before death of an individual or estate owner, including married couple. It's aims is to maximize the wealth of the estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner's intended beneficiaries while paying the least amount of taxes. Life insurance always play an important role in estate planning because of its tax free statutes. In this article, we will discuss types of life insurance policies in estate planning.

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I. Term life insurance
Term life insurance is a type of insurance that protects the insured. Most of the time the owner of the policy is guaranteed for a certain period of time such as 5, 10 and 20 years. Term insurance is best used in estate planning for people who are just marry or plan to start a family soon. It is cheap compared to other types of insurance. Most term life insurances are used to create an estate asset in case of sudden death of policy holder. Other term life insurance such as mortgage insurance is used to protect the home-owner's family.

II. Whole life insurance
Whole life insurance is a participate insurance with dividends accumulated in the policy each year. It is best used in estate planning for people who already know the asset of his or her estate or create a estate asset in case of sudden death of policy owner.

III. Universal life insurance
Universal life insurance is the best insurance for people who have a lot of unpaid taxes, because it contains life insurance and investment values. At the death of the policy owner the life insurance and the funds accumulated are paid to the designated beneficiary or beneficiaries tax-free and it is normally used to paid for unpaid income taxes owed by the deceased person.

I hope this information will help. If you need more information or insurance advices, please follow my article series of the above subject at my home page at:
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