Life Insurance: A Component of Estate Planning

By Nicholas Vanikiotis

Life Insurance is one of the many components when planning your estate. It plays a slightly different role than the other assets in your estate. It is intended to make sure your estate has value at the time of your death. Thus, it is important to understand the different options available and to make sure it is included and given the proper attention when planning your estate.

The two main types of life insurance are whole life and term life insurance. The main difference is that whole life is permanent while term life is not. Term life insurance is a short-term option, which is usually taken by people who are younger since it is inexpensive relative to whole life insurance. Term insurance is taken out for a specific purpose and only last for five to ten years. This may be a good option for a young doctor going to work overseas in a hostile area where death is more likely than at home. Another aspect of term insurance is the premiums increase over time.

Whole Life is the other option of insurance. This one is a lifetime commitment and attached by a savings component, which you have the opportunity to invest in different investment vehicles of your choosing. There are variations of whole life insurance that give you more freedom regarding the terms of the policy and how the savings component is handled.

http://www.investorguide.com/igu-article-348-life-insurance-types-of-policies-and-provisions.html

http://www.rhondasherwood.com/pdfs/EstatePlanning.pdf

http://www.newyorklife.com/nyl/v/index.jsp?vgnextoid=c4bc2f5a919d2210a2b3019d221024301cacRCRD