What Can Life Insurance Provide?

Life insurance can provide a death benefit, in cash, that can be used to pay estate taxes and other costs. It's paid directly to the beneficiary of the policy, without being subject to the time and expense of probate. True, life insurance does require premium payments, however, life insurance premiums can be looked at as a way of funding future estate taxes. You get guaranteed liquidity and a death benefit that is generally free from federal income taxes. When you think about it, the financial protection provided by life insurance can be invaluable to those with the burden of paying estate taxes - your loved ones.

In addition to the many benefits of life insurance protection, life insurance offers a unique advantage: the opportunity to pay estate taxes with discounted dollars. When you buy life insurance, you are generally covered after you pay your first premium. This gives rise to a principle known as discounted dollars. If you die shortly after you take out a life insurance policy, the full death benefit is still payable. Instant protection, then, gives you the potential to benefit from financial leverage - the potential to pay estate taxes at the cost of current premiums. Coping with estate taxes may be a difficult proposition for you or your survivors. When it comes to paying them, consider life insurance.

It may a be strategy worth considering, and overlooking it could be costly.