Life insurance could play an important role in your wealth-preservation strategy. Although many people allow their life insurance policies to lapse as they get older, there are good reasons to maintain coverage. Life Insurance Strategies The most obvious reason, of course, is to provide for your spouse and others who depend on you. If the day-to-day needs of your loved ones are taken care of, you may want coverage to provide liquidity and potentially increase the value of your estate. Covering Costs A life insurance policy could help pay any taxes or other liabilities due on your estate. But even if your estate is not subject to taxes, end-of-life costs — medical expenses, legal costs associated with tying up financial affairs, and other final expenses — could be a burden for your heirs. Unlike some assets, life insurance death benefits are typically paid relatively quickly, and an insurance death benefit is usually not subject to federal income tax. A relatively modest life insurance policy could be a big help during a difficult time. Life Insurance Trust Day-to-day needs Beneficiaries The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have contract limitations, fees, and charges, which can include mortality and expense charges.
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