When Kentucky residents get started on the all-important task of estate planning, they probably know that they will be considering options like wills, trusts and power of attorney documents, among other options. However, some of our readers may not know that life insurance plays an important role in many comprehensive estate plans.
So, will life insurance be a part of your estate plan? More likely than not, the answer to this question is yes. According to a recent news article, the majority of Americans – 52% – have at least some form of life insurance, although many of those individuals apparently do not believe they have enough coverage.
The process for life insurance is supposed to be quite straightforward: the policyholder buys the policy for a certain amount – say, for example, $100,000 – by paying regular premiums to the insurance company. Then, when the policyholder dies, that amount is paid directly to the designated beneficiary on the policy. One note of caution: typically, the older a person gets, the higher the premium for the policy. That’s why it can be quite beneficial to get a policy in place when you are younger.
Life insurance in your plan
What are the main benefits of planning for life insurance payouts to be part of your end-of-life scenario? There are a few. For starters, the payout can be a fast source of cash for your loved ones, which can be used for funeral expenses or medical costs, for example – if those expenses weren’t accounted for already in your estate plan. And, in most situations, life insurance payouts are not included in a person’s estate, so the payouts are direct to the designated beneficiary.