The Relationship Between Estate Planning And Term Life Insurance

The Relationship Between Estate Planning And Term Life Insurance by Sharon Taylor

You might hear the word, “estate planning” and immediately begin to think about writing your will, rather than wondering about the relationship that exists between a will and term life insurance. Term life insurance and estate planning actually have a pretty strong relationship to one another because there is much more to estate planning than simply writing up a will and hoping for the best

When people think of estate planning they often think of rich older folks who have a lot of assets that need to be divided among family and friends. Unfortunately for those people, there is a lot more to estate planning than simply figuring out where assets will be divided when someone with a lot of money passes away. Estate planning is a process that absolutely everyone should take part in, because it involves preparing your family, loved ones and your assets for an untimely death. Unfortunately, without proper asset management and estate planning, the Government will be forced to come in and take control of everything you leave behind. So if you do not prepare yourself and your family through term life insurance and estate planning, your family may end up with absolutely nothing once you are gone

If you have a spouse, children or a family that you need to care for, the combination of estate planning and term life insurance is truly vital. Together, these two aspects of financial planning make up the complete picture when it comes to protecting your family from the financial burden of your death. Term life insurance plays a large role in estate planning, because both have to do with protecting your family, your loved ones and your assets if you should happen to die unexpectedly at any point in your life.

Term life insurance, traditionally purchased at either five or ten times the amount of your yearly salary, pays out to your loved ones upon your untimely death. The coverage is designed so that your family can pay for your funeral and burial costs, and also be financially protected without you there to bring an income into the household. You should purchase a term life insurance policy that pays out enough to pay off your debts, house payment and any other financial obligations so that your family can get back on their feet in your absence.

Estate planning is a form of financial planning that has to do with determining what will happen to your estate, or your assets, upon your death. If you have a plan for where you want your assets to be divided, it is important that you get it all down on paper in the form of a will, so that there will be no issues if you should happen to pass away much sooner than you expected to. If you do not conduct financial planning and estate planning processes, you may actually lose a lot of your assets rather than leaving them to the important people in your life. If you own a house in your name, and you pass away without leaving the deed to your spouse, they may lose the house to the government if you do not plan accordingly

Now that you understand what estate planning and term life insurance mean for your family, hopefully you will understand why it is so important to combine both in order to protect yourself and your family from future financial burdens