Today’s post is the first in a 3 part series on lesser known ways to leverage your life insurance protection. You’ve probably heard financial analysts speak of life insurance as a wealth replacement tool. Though it sounds nice in theory, what does that really mean? How does it work? Though there can be a lot of complexities, here is an explanation of life insurance, as wealth replacement, in its simplest form:
Many people choose to purchase life insurance protection in an amount large enough to cover their estate taxes at the time of their death. In doing so, the insured prevents their survivors from having financial strain during a difficult time. Rather than selling assets and making financial decisions, to cover estate taxes, the survivors can instead focus on the grieving process. Additionally, this prevents survivors from having to make hasty, untimely financial decisions in order to settle tax debt.
Many people also choose to pair a life insurance policy with a charitable remainder trust. This allows the investor to donate assets to a charity while still drawing the interest income it produces. With some of that interest income the investor can purchase a life insurance policy. By naming his or her heirs as the beneficiaries of the policy, the death benefit eventually replaces the assets donated to charity. This approach helps to preserve both the tax deduction associated with the charitable gift and the wealth.
These are just two of the ways you can leverage life insurance as wealth replacement. We recommend speaking with a licensed life insurance agent, or a financial planner to learn more about these and other wealth replacement options. Regardless of how you choose to leverage your life insurance protection, it’s also a good idea to put your policy in a trust. This is the best way to ensure that your death benefit is distributed according to your financial plan.
Ready to learn more? Contact us today. At IntelliQuote we have a staff of highly experienced life insurance agents, on hand, to answer your questions. Receive one-on-one support from the comfort of your home or office.
Interested in learning more tips and tricks to effectively leverage your life insurance protection? Follow our blog. Here we will be tackling this and other issues that directly impact your finances. While you’re here, be sure and read these recent posts:
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