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If you need assistance, please call us at 443-589-5600.

Life Insurance Policies & Estate Planning

When we meet with our estates and trusts clients, the conversation about life insurance policies often arises. Life insurance policies go hand-in-hand with estate planning. As you plan for what will happen with your assets after you pass, you should consider what life insurance policy best meets your family’s needs. Although we at Sessa & Dorsey are not insurance experts, we understand the importance of life insurance and can direct you to the right insurance advisor to meet you and your family’s specific needs.

 

What is Life Insurance?

Life insurance is a financial agreement with a life insurance company to pay the designated beneficiary (or beneficiaries) a specified amount of money after you pass away. Life insurance policies differ in the duration of coverage, extent of coverage, and amount paid to the beneficiaries. Like health insurance, you pay a premium to secure a life insurance policy. Each life insurance policy is different, and you should choose very carefully which one will best suit your family’s needs.


Why Do I Need Life Insurance?

As estate planning attorneys, all too often, we meet with family members of loved ones who passed away unexpectedly without life insurance, or with a poorly chosen life insurance policy. The family is left having to pay for the funeral and deal with the loss of income from their loved one unexpectedly passing away. This can have a huge financial impact on the families and their future. Additionally, life insurance can provide important liquidity to the family when much of the family’s assets consist of a business or real estate.  Certain policies can be a crucial part of an estate plan if federal or state estate taxes are likely to be owed.

 

What Do I Need to Know When Choosing A Life Insurance Policy?

As you grow older and experience life changes, like starting or growing a family, or earning more in your career, you should revisit your life insurance policy to make sure it meets your family’s needs. For example, the simple life insurance policy you may have chosen when you were first married and were starting your career may not be the best choice if you now have a high-level position and a family with children. We encourage you to revisit your life insurance policy as you experience any significant life changes financially or within your family circumstances.

When choosing a life insurance policy an important thing to remember is that significant health changes in the future could severely limit your ability to purchase new life insurance by making you uninsurable or making the cost of insurance prohibitively high.  The best time to purchase life insurance is when you are still healthy.

 

How Should I Include Life Insurance in My Estate Plan?

You may want to consider creating an irrevocable life insurance trust to own and be the beneficiary of your life insurance policy. If properly structured, an irrevocable life insurance trust can avoid estate taxes on the amount paid to your beneficiaries. If you are interested in learning more about irrevocable life insurance trusts or how to transfer your life insurance assets after you pass away, please contact us. The team at Sessa & Dorsey is here to help.

 

At Sessa & Dorsey, we consider the bigger picture at hand and advise our clients on the best estate planning tools for their specific needs and desires. If you have questions about estates and trusts, please contact us at (443) 589-5600.