When you analyze the components of the typical estate plan you’ll find that life insurance plays a pivotal role. Without question, the most common use for life insurance would be as a vehicle of income replacement. If you are married and you were to pass away suddenly, where would your surviving spouse be financially? Most married couples enjoy a standard of living that is made possible by the combination of the incomes earned by both partners. To lose your spouse would be emotionally devastating, but if it was to be financially devastating as well the load could be too much to bear.
It can be said that life insurance becomes especially important when you have someone depending on your income. With this in mind, when you have children you’re going to have to reevaluate your coverage and make sure that it is sufficient to provide for their needs for the long haul. In a very real sense this is not a choice; it is one of the responsibilities of parenthood, and it would be wise to look at it as such.
Though no one is expecting it to happen on the day that they get married, divorces are common. A divorce is a life-changing event that is going to call for an insurance coverage review, and you will have to revise your coverage when you get remarried as well.
In addition to functioning as an income replacement vehicle life insurance is also used to balance inheritances. Some people have most of their financial resources tied up in a single piece of property that they do not want to liquidate. They may choose to leave this property to one of their children and take out life insurance policies of a similar value and make their other children the beneficiaries in an effort to provide equally for everyone.
If you would like to ask questions about how life insurance fits into your inheritance plan, get in touch with an experienced estate planning attorney and arrange for a consultation at your earliest convenience.