Life insurance can save heirs money in the future

Oct 07, 2011

Taxes on estates can cause financial burden for heirs. Life insurance can protect loved ones from financial hardship.

Estate taxes can often force heirs to sell off some of the inherited assets they receive to cover the costs. However, a permanent life insurance policy can provide beneficiaries with a source of cash to help pay for these taxes. This will protect assets from being sold, while helping heirs avoid a financial tax burden.

Fox Business reported that an individual's taxable estate includes all money in a bank and retirement account, the value of assets such as a home or car, and a life insurance policy. All assets whose values exceed the federal estate tax exemption of $5 million is taxed.

Principal at Weiser Capital Management, David Weinstock, told the source that heirs will be taxed 35 percent of the value of the estate beyond the tax exemption. However, the exemption is scheduled to be reduced to $1 million at the end of 2012, and the top estate tax rate will increase to 55 percent.

But many assets may not be converted into cash easily for heirs, depending on the market, and a life insurance policy can ensure some cash inheritance to offset the estate tax. In addition, term life insurance policies can provide protection to families and loved ones for a specific period of time. These policies offer lower premiums to holders, while maintaining the same face value, which can give customers greater flexibility and control of their coverage and benefits.

John Wingate Insurance recently announced it will offer term life insurance policies to its Delaware clients. Policyholders can select the amount of the death benefit or face value for beneficiaries to receive for 10, 15, 20, 25 or 30-year terms.  

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