Life Insurance and Estate Planning

As we mentioned in previous articles, estate planning is the process of accumulating and disposing wealth before death of an individual or a group of owners known as an estate owner including married couple. It's aims is to maximize the wealth of the estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner's intended beneficiaries while paying the least amount of taxes. Life insurance always play an important role in estate planning because of its tax-free statutes.

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1. Life insurance is a primary vehicle to protect your family and loved ones in case of sudden death and it provides a liquidity asset in estate planning.
2. Even though financial security is diminished as children grow older, the need to protect the estate's assets against any unnecessary tax paid is increased upon the death of the estate owner.
3. In most cases, life insurance is the cheapest way to protect your family's financial security and provides liquidity assets to cover the deceased person's administration cost and income tax must be paid for any unpaid gains such as stocks and property appreciation.
4. Life insurance paid out is usually tax-free.
5. It is guaranteed by the insurance company by it's cash reserve and by insurance-guaranteed funds up to $300,000.
6. In Canada, life insurance is guaranteed by Assuris which is a non-profit organization with members from all major insurance companies up to 85% or $200, 000, which ever is less.
7. Since life insurance is a form of pooling risk, it pools from a number of small contributors to compensate for those who suffer a loss, therefore it minimizes the risk of bankruptcy.
8. Many insurance companies invest their reserve funds conservatively.
9. Finally, life insurance always serves its purpose of creating an estate or perverse estate assets.

I hope this information will help. If you need more information or insurance advices, please follow my article series of the above subject at my home page at:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/