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Life insurance: Protecting your legacy and your loved ones’ future

On Behalf of | Jul 8, 2024 | Estate Planning |

You’ve worked hard to build a secure life for yourself and your family. You own a home, have retirement savings and maybe even a few cherished possessions you’d like to pass down. But what happens if you’re no longer there to provide financially?

Unexpected events can leave your loved ones facing a heavy burden – emotional and financial. Life insurance can act as a safety net, ensuring your family has the resources they need during a difficult time. But life insurance isn’t just about death benefits; it can also be a powerful tool for protecting your assets.

Here’s what you should know about life insurance and asset protection.

Life insurance offers a variety of benefits beyond simply providing a payout upon your death. Here are two key ways life insurance can safeguard your assets:

  • Debt protection: Life insurance proceeds can be used to pay off outstanding debts such as mortgages, car loans or student loans. This can prevent your loved ones from inheriting financial burdens and allows them to focus on grieving and adjusting to their new reality.
  • Estate liquidity: Settling an estate can involve various expenses, including probate fees and taxes. A life insurance policy can provide immediate cash to cover these costs, preventing the need to sell assets to meet these obligations. This can be especially valuable if your primary assets are tied up in real estate or other illiquid investments.

Life insurance may be one part of your estate plan. You may want to discuss your goals and options with a skilled professional.

Life insurance as a planning tool

Choosing the right life insurance policy depends on your specific needs and goals. Here are a few things to consider:

  • Term life vs. whole life: Term life insurance offers coverage for a specific period (term) at a lower premium. Whole life insurance combines a death benefit with a cash value component that grows over time. Term life is generally a good option for young families looking for affordable protection, while whole life can be beneficial for building long-term wealth and covering future estate costs.
  • Coverage amount: Determine the amount of coverage needed to meet your family’s financial obligations and future goals. Factors to consider include outstanding debts, mortgage balance and desired income replacement for your spouse/children.
  • Beneficiaries: Designate who will receive the life insurance proceeds. You can name specific individuals, a trust or even a charity.

Life insurance can be a cornerstone of your financial planning strategy. Consulting with a Cartersville estate planning attorney can help you choose the right policy type and coverage amount to protect your loved ones and your assets. They can also ensure your plan aligns with your overall estate planning goals for a secure future for your family.