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Deciding on Life Insurance as Part of Your Estate Plan


Making sure you and your loved ones are provided for in the future is one of the primary goals of estate planning. In addition to creating a will, trust, and other types of legal documents to protect your assets and interests, you may want to consider the need for life insurance. There are different options to choose from in terms of the type of policy you select, and different situations in which making this investment could be a smart move.

Life Insurance Options

Life insurance can be used to provide for final expenses and to ensure your family is not left with a mountain of unpaid debts. It can also be used as a means of building wealth, guaranteeing others inherit from your estate. CNN Money advises that there are two basic types of life insurance to consider:

Cash Value Insurance 

This invests a portion of your premium, which is the ‘cash value’ component. There are three types of cash value policies, depending on the how investments are made:

  1. Whole life, which offers a fixed payable on death amount, while the insurance company makes investments you can borrow against.
  2. Universal life, which allows you to increase your earnings through money market type investments, but a fixed rate is generally not guaranteed.
  3. Variable policies, which also does not offer a fixed rate of return, but allows you to increase earnings through investments in stocks, bonds, and mutual funds.

Term Life Insurance

Term life insurance has no cash value or investment component, unlike a whole life policy. It simply allows you to pay premiums over a specific term, or number of years, while providing a predetermined amount to beneficiaries in the event of your death. It is less expensive than cash value insurance, although premiums do go up the older you get.

Deciding On Whether You Need Life Insurance

In addition to providing for final expenses, life insurance can give your loved ones a cushion to fall back on in the event something happens to you. The Balance advises that there are four specific groups of people who are likely to benefit the most from life insurance:

  • Homeowners and those with significant debts: Select a policy amount that will pay off these expenses in the event anything happens to you.
  • Married couples: When a spouse gives up a career to stay home and raise children, life insurance can make up for lost income.
  • Business partners: Taking out a life insurance policy on yourself or your partner can help ensure your business survives any unexpected losses.
  • Young adults: Insurance policies are inexpensive when you are young. You may be able to lock in a low premium, while selecting a policy that builds you a tidy nest egg.

To find out more about building wealth and estate planning, call or contact the Protect My Assets Law Group online today. Request a one-on-one consultation with our Boca Raton estate planning lawyer who can guide you in making important decisions that impact you and your loved ones, making sure your future interests are protected.