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Life and Health


By February 1, 2013No Comments

Most people buy Life insurance to provide an income source for their survivors. However you can also use a Life policy to save a host of other financial headaches. Consider these four examples:

  1. Funding a bequest. A couple has a beach house that constitutes half of their wealth. Their two sons don’t care about the place, but their daughter has made vacations there a centerpiece of her family’s life. Because the parents can’t give the house to their daughter and have an equivalent amount for their other kids, they buy Life coverage for the value of the beach house. When the surviving spouse dies, the children will have the house, the other half of the estate — and, the Life insurance benefit.
  2. Maximizing retirement income. Many people who expected to leave their children an inheritance before the 2008 downturn are using this resource to live on. Life insurance can cover a financial shortfall in retirement income. A couple who take out a reverse mortgage can use part of the monthly payment for a Life policy, which will preserve the value of the home for their heirs, while still keeping a roof over their heads. Knowing that your spouse will get an insurance payment on your death will free you up to maximize your benefit — however, the earlier you act, the better.
  3. Paying college costs. An older couple who want to contribute to their grandchildren’s college costs can take advantage of the annual tax-free gift of $13,500 to each child. If they are worried that they won’t live to complete their program, they can insure themselves for the total amount, and find peace, knowing that their wishes will be carried out whether they write the last check themselves or leave it to their children.
  4. Wealth replacement. The well-to-do can buy a Life policy that will cover the estate taxes on their holdings, so that their heirs will not need to sell investments while they’re grieving — or when prices are low — in order to satisfy the IRS. More complex strategies include combining Life insurance with an instrument such as a charitable remainder trust, which allows investors to donate an asset to charity while drawing the income that the asset provides.

For more information on getting the most out of your Life insurance coverage, feel free to get in touch with us.