When you graduate from school and land your first job, you will usually spend a couple of days in orientation sessions. One of these invariably involves the benefits that your new company offers its employees, and in a very real sense this is the day that you begin to plan your estate. When they get around to addressing the company’s life insurance offerings, it may be the first time you really give your mortality any serious thought. However, it is a good introduction to the responsibilities that mature adults have to their loved ones. And the fact is that when you sign up for that first life insurance policy, you do indeed have a fledgling estate plan in place.
Life insurance policies provide cash payouts to your named beneficiary or beneficiaries at the time of your death, and though they are useful for everyone, they are especially important for people who are still working. Let’s say you have a family with children still in the home and you are enjoying a particular quality of life. You have to ask yourself where your family would be financially if you were to pass on unexpectedly. Most families would not be able to weather that storm and retain their quality of life. This is why it is important to evaluate the financial void that would exist in the event of your death and make sure that you have enough life insurance to provide for your family in any eventuality.
For those who have reached retirement age, life insurance policies can provide liquidity that can be used to cover funerary expenses and fees associated with the administration of your estate. They also provide a tax-free way to place cash inheritances directly into the hands of your loved ones.
Life insurance policies are a staple of long term estate planning, and it is advisable to review your coverage often as you enter into different stages of life.