When you have people relying on your income you have to ask yourself where they would be if your earnings suddenly disappeared. While it is true that the average lifespan in the United States is over 78 years this is of course just that, an average. People can and do die before their time. If you were to do so without having an income replacement vehicle in place you could be putting your loved ones in an untenable financial position. Heaping this on top of the grief that would come from your death would be truly devastating.
The ideal income replacement vehicle for most people is going to be life insurance. Many are first introduced to life insurance when they enroll in the benefits program that is offered by their employer. As you travel down your life’s path you are generally going to assume more and more responsibilities, and as you do you must revisit the amount of coverage that you have versus what you need.
Each addition to the family is going to change the playing field. If you were to divorce you would then have to reevaluate your beneficiaries. Should you remarry, a whole new family dynamic would exist and a review of your life insurance coverage would be in order.
In addition to providing income replacement, life insurance is often used in the field of estate planning for other purposes. Buy-sell agreements are utilized in small business succession planning, and the purchase of life insurance is at the core of these agreements.
Life insurance is also used by people who need to balance inheritances. Sometimes you may have a large portion of your assets concentrated into one piece of property, your business for example. If you were to give this property to one of your heirs – say a son who might be running the business – you may purchase life insurance making other children the beneficiaries in an effort to provide an equal bequest to all.
To gain a deeper understanding of how life insurance can fit into your estate plan, get in touch with an experienced estate planning attorney and arrange for an initial consultation.