In almost every estate plan life protection is present and it has the main role of providing support as well as covering educational expenses. Life insurance for estate planning also serves for paying taxes on death, funding businesses, and retirement plans as well as supporting buy-sell agreements. Mortgage protection is another important aspect in terms of estate planning, in combination with life insurance. When it comes to small estates, death taxes don’t represent an important consideration. Policy owners need to primarily pay attention to the fact that the beneficiaries are provided well by the selected life protection coverage. On the contrary, side, when we consider larger estates, in the process of estate planning, life insurance definitely plays a significant role.
Pricing considerations of life insurance for estate planning
There are several pricing considerations that you need to know when it comes to estate planning. The first thing that you need to keep in mind is that in most of the situations when the beneficiaries receive the life protection, it is free of income tax. In estate planning, life insurance could be used for various purposes, such as wealth accumulation, income replacement, debt repayment and estate liquidity; you can take according to your need.
Another thing you need to know is that there are various types of life insurance policies for estate planning of which prices vary from policy to policy. Furthermore, there are also a lot of ways how these life policies could be owned, in terms of estate planning. Just like life insurance for sick people, people at advanced ages or families, the better the life expectancy, the less you pay for the premiums. It is possible to choose between whole or universal life insurance policies. In most of the cases, these policies are meant to protect a husband and wife or a parent and his/her child.
In term life plan for estate planning, it is very important to establish who will be its owner. It could be owned by the insured, the spouse or the children or by a revocable or irrevocable trust. Depending on who is the owner, the benefits and disadvantages of these life insurance policies differ. Before jumping into life protection for estate planning, you are highly recommended to consult with an expert in the domain, in order to make sure that you can make the best possible decision. It is very important to get the life insurance that perfectly fits the estate planning needs as well as personal expenses.
Things you need to know about cash surrender value
The cash surrender value represents the amount of money that life insurance company pays to the policyholder or the annuity holder, when the insurance is voluntarily terminated or when the policyholder dies before the life insurance reaches its final term. Most of the permanent life insurances out there have this surrender value, as their components. The surrender value represents the savings of a whole life insurance that are payable for death. If the life insurance is terminated too early, considering the premiums that need to be paid, you shouldn’t expect for too high returns. The surrender value is always lower than the actual cash value if the policy is old enough.