Now is a great time to review your life insurance policies and determine if you have enough coverage. Learn more about how life insurance is essential to financial planning. When someone we know passes, often, we are reminded how precious life is and how financial stability can rapidly change. In some instances, they did not have enough life insurance coverage.
In addition to reviewing assets and recommending strategies to build wealth, financial planning also considers all aspects of risk, including death. Depending on your situation, your financial professional may recommend life insurance during financial planning. Here are common reasons to include life insurance in financial planning:
Provide for loved ones
Families with young children need to plan for the loss of income if a parent dies. In addition to the loss of a working spouse. Even if no children live at home, there may be an economic loss if someone is dependent on their partner’s income. A premature death can result in loss of assets and hinder any financial plan.
If you have a large estate and want to ensure that your beneficiaries don’t have to liquidate assets to pay estate taxes, life insurance can be used for this purpose. Using life insurance to pay estate taxes involves working with your attorney and tax professional. The can help to determine if this is appropriate for your life insurance policy proceeds.
Business Succession Planning
If you are a business owner and plan to pass on the business to a family member or other key employees, life insurance may be part of the new owners’ purchase plan. Life insurance, a part of the succession plan, involves a tax professional. In addition, an attorney to ensure the outcome benefits all parties involved. Using life insurance as part of the business succession often becomes part of the business owner’s retirement plan.
If you’re a parent or grandparent, life insurance can provide part or all of the education funding for the insured (child). And it can happen without tax consequences (assuming interest is applied to cash value). Contact your financial professional to discuss this in detail since a policy loan is required.
If the child doesn’t use it for education funding, you have given them life insurance for themselves or their beneficiaries. Check with the carrier to determine the requirements of the life insurance policy being given to the child. Since parents or grandparents are unable to own the policy once the child has become an adult.
Consult a financial professional
It is not only young families that need protection. But also individuals with debt, businesses relying on crucial workers, and investors who plan to protect their assets.
Reviewing your life insurance is essential at least bi-annually at your financial planning meeting to check beneficiary information for name changes, etc. Be sure to tell your family about your life insurance policies and where to locate them in case of your death.
SWG 2853986-0423c The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.
Our family financial services firm, August H. Velten & Associates, has been in business for 12-years in Melbourne, FL. August Velten (CLU) is a 40-year veteran of the Financial Services industry. August is a former instructor for the Life Underwriter Training Council and once occupied the legislative seat for the Maine Association of Life Insurers. In Brevard County, you may have seen him on local access TV or read one of his articles in a local area magazine. Jessica Waterhouse, August’s daughter, left her own practice to join the firm in 2019. Jessica is a Florida licensed insurance producer, securities licensed (Series 65), a long term care specialist (CLTC) and holds certification as a National Social Security Advisor. Both August & Jessica are instructors for financial literacy workshops in both Brevard and Indian River County offering education in Social Security and Financial Planning. Contact the office today to schedule an introductory meeting or review of your current financial plan.
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