"Life insurance is a crucial part of a financial plan", says Gregory Karp, a noted financial journalist with the Chicago Tribune. His article "A Premium Consideration" points out that with rates near historic lows, there has never been a better time to review end of life financial plans.The decision of when and how much life insurance to purchase can be a difficult one. Though each person must decide for themselves what type of coverage is best, there are times that a whole life insurance policy may be the best choice. Here is a look at some scenarios when a person should consider the purchase of a whole life policy.
Estate Taxes
When a person with a large estate dies, there may be significant taxes on the estate. Those with a large estate may want to use a life insurance benefit to help those who will inherit the estate to pay the estate taxes. While a person may not have a lot of annual income or cash savings, a person who is a business owner, farmer, or who owns large land or property holdings may well have an estate that will trigger a significant estate tax. A whole life policy is one way to plan for the costs of the estate tax. Upon death, the beneficiary of the policy will receive the death benefit and can then use the money to pay the estate tax.
Large Amounts of Debt
A person who has a large amount of debt tied to family assets should consider buying coverage as a way to pay off the debt when the assets are passed to the next generation through inheritance. For example, a person who dies with a large amount of mortgage debt on a family home will cause a financial hardship for his or her beneficiaries as they will have to pay the debt or lose the home. By having a whole policy in place, a person can make certain that the heirs will have the financial means to pay the debt and inherit the home or other asset.
Retirement Planning
While the federal tax code provides numerous ways for a person to save for retirement in a tax advantaged account, those with high incomes are often not allowed to utilize these accounts. One way for high income earners to save for retirement in a tax advantaged manner is through the use of investments inside of a whole life insurance policy. Though not all whole life offer this investment feature, it is a common offering with most policies.
Medical Problems
Though no one can be sure of what the future will hold, those with a family medical history might want to consider obtaining life insurance before problems begin. Insurance companies may not offer insurance to those in poor health or only offer it at a high cost. By purchasing a whole life insurance policy before the onset of medical problems a person can be certain to obtain life insurance coverage while it is still an option.
Peace of Mind
For some insurance buyers, just knowing that a policy is in force and that a person's beneficiaries will receive a payout from an insurance policy provides a lot of peace of mind. For those buyers, a whole life insurance policy is the best choice. A whole life insurance policy will provide a lifetime of protection unlike a term life insurance policy that will expire after a period of time.
If you have additional questions regarding life insurance and if it right for your Florida Retirement System portfolio, then contact Edwards Financial Services, a Winter Park, Florida based financial services firm who actively designs programs to plan, grow and protect client assets. For more information on Edwards Financial Services, visit:EdwardsFinancialServicesinc.com.
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