Creative Uses for Life Insurance

A recent study by two non-profits found that a record 102 million American adults either lack life insurance or don’t have enough coverage. Misunderstandings about costs and types of policies are major barriers. Even those with life insurance often don’t realize how it can support their financial and estate planning goals.

Types of Life Insurance for Estate Planning
About 52% of US adults have life insurance, but 42% feel underinsured, and 37% plan to buy coverage soon. If you’re considering life insurance for estate planning, here are two main types:

  • Term Life Insurance: Pays a death benefit if you die within the policy term, usually 10-30 years.
  • Whole Life Insurance: Lasts your entire life and can build cash value over time.

There are also specialized policies for specific needs, such as covering loan balances, final expenses, or insuring two lives.

Life Insurance Perks You Might Not Know About
Life insurance is more than a death benefit for dependents. It offers various perks for different life stages and situations. Here are some creative ways to use life insurance in your estate plan:

  • Funding a Trust: Imagine you have a child with special needs, a niece who dreams of college, or a beloved pet. You can name a trust as the beneficiary to set terms on how the money is used. An irrevocable life insurance trust can also avoid probate and might reduce estate taxes.
  • Paying Taxes and Debts: If you own a small bakery or have a valuable art collection, life insurance can cover your estate’s tax payments and debts. This prevents the need to sell these assets, ensuring your loved ones inherit them intact.
  • Equalizing Inheritances: Suppose you have a family vacation home that one child cherishes but the other prefers cash. Life insurance can balance the inheritances. The home goes to one child, while the other receives a life insurance payout of equal value.
  • Making Philanthropic Donations: Passionate about a local animal shelter or community theater? You can name a charity as a beneficiary, ensuring your legacy supports a cause you care about.
  • Paying Final Expenses: Final expense life insurance covers end-of-life costs like funeral and medical bills, which can add up quickly.
  • How to Fit Life Insurance into Your Estate Plan
    Life insurance is valuable for everyone, regardless of life stage or circumstances. It adds flexibility to your estate plan, helping you and your loved ones handle future expenses. If you face a life insurance coverage gap, we can help you find the right policy to fit your needs and budget. Schedule a meeting to see how life insurance can enhance your estate plan.

Andrea L. Jakob, PA is located at 12401 Orange Drive, Suite 219 in Davie.
They can be reached at 954-862-1479 or on the at