In America, we love insurance. We have insurance on everything from our lives to our pets to our jewelry. Although insurance can be a wonderful estate planning component, be sure that you understand what each type of insurance policy covers and be sure to consult with your estate planning attorney first to determine whether your plan will benefit from that type of insurance. Some of the more common types of insurance found in an estate plan include the following:
Business/Partner Insurance — If you own a small business, there are various reasons why you may want to include insurance coverage geared toward the business. One reason focuses on passing the business down to a family member. If the business assets are sufficient to trigger estate taxes, you may wish to purchase a policy that will cover the tax debt to ensure that none of the business assets must be sold to pay the taxes.
Disability Insurance — In the event that a disability prevents you from working for an extended period of time, a disability insurance policy will provide wage replacement. This is typically a good idea if you are young and do not have a substantial amount of money saved up for an emergency.
Long Term Care Insurance — As we age, the possibility of having to spend a considerable amount of time in a long term care facility increases tremendously. The cost can quickly deplete your life savings. A long term care policy can prevent that from happening.
Life Insurance — Whether or not your estate truly needs life insurance depends on the other assets found in your estate. Be sure to consult with your estate planning attorney before you assume that you need life insurance.