Estate planning with life insurance

Oct 06, 2011

Life insurance can be used to help with estate planning.

Life insurance is a versatile way of investing, according to Nichole Morford of the Agent's Sales Journal, and it is a key component in a well-executed estate plan. However, she said agents must continue to adjust their scope and sales pitch when it comes to this solution.

Morford spoke with Brian Titus, advanced marketing attorney at Sabrus Partners, a Hartford, Connecticut-based wealth management firm, on how to get the most out of the product in 2011 and beyond. Titus said after death, the benefits are immediate, but before death, it pays a benefit that is generally tax-free income to the beneficiary. It can be made estate tax free if necessary.

"Thus, the policy's internal rate of return on its premiums is pretty attractive," Titus told Morford in the interview. "And, in today's economic environment, a third reason why life insurance is so effective in this context is that its benefits are not necessarily correlated to any market conditions. When death benefits are paid, for example, the current status of the stock market is not a factor."

Cathy Pareto said on Investopedia that life insurance is present in almost every estate plan and serves as a source of support, education-expense coverage and liquidity to pay death taxes and other expenses.

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