Life insurance is a part of many American’s estate plans and is an important tool. In June 2024, according to a study by LIMRA and Life Happens, 52% of Americans have a life insurance policy. More than 100 million Americans are uninsured or underinsured when it comes to their life insurance.
Life insurance can help cover the immediate expenses after your death: medical bills, funeral costs, and other final expenses that you don’t want your beneficiaries to face without help. Life insurance funds avoid the probate process and help your beneficiaries receive direct quick access to liquid funds.
How much Life Insurance Do You Need?
To determine the amount of life insurance you need, it is important to estimate the future expenses that your loved ones will take over after your death and the immediate costs following your death, like your funeral. You might consider everyday expenses, a mortgage, loans, credit card debt, and college education savings for dependent children.
The right life insurance policy should help your family transition through the loss without having to worry about money as much.
Beneficiaries
With a life insurance policy, it is important to choose life insurance beneficiaries as part of your estate plan. You can designate primary and secondary beneficiaries to the policy to receive the assets after you pass away. If the primary beneficiaries cannot accept the assets, then it goes to the secondary beneficiaries.
Irrevocable Life Insurance Trusts (ILITs)
If you set up an Irrevocable Life Insurance Trusts, then after you pass your life insurance funds will be deposited in your trust and the trustee you designate will handle the trust and distribute the death benefit to your named beneficiaries. Since the ILIT is irrevocable, you cannot easily modify or revoke its terms and you lose control of the policy once you set it up.
Life Insurance options
- Term Life Insurance
- The policy’s term ranges from 5 to 30 years. It is ideal for short-term needs, such as until your mortgage is paid off or your children are through college.
- Whole Life Insurance
- This policy offers permanent coverage, so if premiums are paid, a death benefit is paid whenever you die. This is ideal for long-term needs: planning your legacy and transferring your wealth.
- Universal Life Insurance
- This policy is riskier than other policies because it has a cash-value component which value depends on market conditions
Contact a Milwaukee Estate Planning Lawyer
It is essential to pick the right policy for you to ensure that your loved ones are protected after you pass. Contact an experienced estate planning lawyer to see how life insurance can fit into your estate plan. Attorney Konstantakis has over 28 years of experience and will help ensure that your future is protected.
