Estate Protection with Life Insurance
Many of us own houses; some of us own businesses; a few own other sizeable assets. In most cases, we want our heirs to receive these assets intact and in entirety. Life insurance is one of the best tools available to accomplish estate protection. Normally, permanent life insurance is used in estate planning situations.
The Estate Tax Problem
Federal taxes alone can exceed 50% of an estates value. When an estate does not include enough liquid assets to pay the taxes due, assets must be sold. Thus, businesses, houses, etc. are removed from the estate, and the inheritance available to the heirs is considerably less than the estate’s actual worth.
How life insurance protects an estate
The obvious role that life insurance plays in estate protection is to provide enough funds to cover the estate taxes. But there’s more… one of the reasons that life insurance is so appealing is that proceeds from life insurance are generally exempt from taxes.