Most people purchase life insurance in Louisiana to secure their loved ones’ futures. The benefits don’t go through probate or any other legal process; your named beneficiaries start getting the proceeds immediately after you pass. But, life insurance can also be used to fund a trust and pay off your debts and other expenses. The role your policy will play will depend on whether or not you’ve included it in your estate plan.
Understanding life insurance and estate planning
When you purchase a life insurance policy, you are the policyholder and owner. You have the right to change the beneficiary, how much coverage you have and other policy features. During the course of your life, you’ll pay premiums to keep the policy in force. When you die, the death benefit is paid to your named beneficiaries.
In estate planning, life insurance can do more than just provide monthly income to your named beneficiaries. For example, if you have a mortgage, the death benefit can be used to pay it off, so your family doesn’t have that burden after you’re gone. Life insurance can also be used to pay estate taxes or other debts that you may leave behind.
Factors to consider when including life insurance in your estate plan
Deciding whether or not to include life insurance in your estate plan is a personal decision you’ll have to make depending on your specific circumstances. Some factors you may want to consider include:
• Your age and health
• Debts that might affect your loved one’s inheritance
• Your family situation
• The extent of your estate
If you are older and have a lot of debt, including life insurance in your estate can be a good move because it can take the role of paying off what you owe while your loved ones receive other valuable assets like your real estate and business. If you have young children, it could be wiser to keep your life insurance out of the estate plan and let the insurance company control it.
Life insurance can be an essential part of your estate plan in Louisiana, but it’s not suitable for everyone. Basically, deciding where to place it will depend on your overall goals for your loved ones.