There are 6 main reasons to buy life insurance with reference to estate planning.
For the Death Benefit
- To replace earning power at death
- To pay for cash needs that arise at death
As a Disciplined Saving Program
- To help pay for educational costs
- To supplement retirement income
- To take advantage of business opportunities
- For financial emergencies
Because of the Risk of Waiting
- Insurability may be impaired or lost
- Premiums are lower now than they will be at a higher age
- To begin building cash values that may be used in the future for collateral
Recognition of Personal Responsibility
- To family
- To a banker
- To a mortgage company
For the Tax Advantages
- Death proceeds are received free of income tax
- Cash value accumulations are tax deferred
- Cash value loans or withdrawls are free of tax, as long as the policy stays in force
- Accelerated death benefits are received free of income tax
For the Flexibility
- Benefits may be available regardless of whether the policy owner lives, dies or becomes disabled
- Life insurance is portable, benefits are not lost due to job changes
