How Does Life Insurance Factor Into Estate Planning?

Law Office of Geoffrey Fong Sept. 20, 2023

Insurance document and silver ballpoint penEstate planning involves a wide range of documents and legal preparation to make sure your wishes are carried out and your assets are allocated accordingly to care for your loved ones in your absence. Life insurance policies can serve a similar purpose. Knowing how life insurance can factor into your estate plan can provide you with a more well-rounded understanding of your decisions to prepare for the future. 

Whether you already have a life insurance policy in place or are considering one, you can benefit from working with an experienced estate planning attorney to learn how your life insurance can be integrated into your comprehensive estate plan. If you are located in Rocklin, California, or the surrounding areas of Roseville, Folsom, or Citrus Heights, reach out to the Law Office of Geoffrey Fong to schedule a consultation. 

Possible Uses of Life Insurance in Estate Planning

There are different ways a life insurance policy can be used as part of your estate plan, including: 

  • Providing immediate funds for loved ones. 

  • Enhancing the value of an estate. 

  • Paying off the decedent’s taxes or debt obligations. 

  • Covering long-term healthcare expenses. 

As you can tell from the list above, adding a life insurance policy to your estate plan can be beneficial. The first step in integrating life insurance into your estate plan is knowing how to select the right policy. 

Things to Consider When Choosing a Life Insurance Policy

Life insurance policies are available in different types and configurations, depending on your needs and how you want to prepare for the future. When looking at different types of life insurance, some of the factors you should take into account include: 

  • Income: Your standard of living and the overall size of your estate can play a large role in what type of life insurance you can consider. 

  • Healthcare costs: If you wish to be covered for potential long-term healthcare, some types of life insurance policies will be more beneficial than others. 

  • Family size: The more people you want to take care of, the more you’ll have an idea of what type of insurance policy you need to choose. 

  • Business ownership: Owning your own business can also play a role in how your life insurance policy functions and what type of policy you need. 

After you have considered your options for insurance policies, your next set of decisions involves choosing your beneficiaries. 

Establishing Beneficiaries

In most cases, an individual taking out a life insurance policy will choose their spouse as the primary beneficiary. After the spouse, children are the next most common beneficiaries (with benefits being held in trusts for minor children). If there is no surviving immediate family member, it is not uncommon for the beneficiary of the life insurance policy to be the decedent’s estate itself. 

How a Skilled Attorney Can Help

With so many different plans and documents to consider, it can be easy to feel overwhelmed or confused. Fortunately, there is professional assistance available to lead you in the right direction. By preparing your estate plan through a skilled attorney, you can make sure you fully understand each step along the way. Your attorney can help you understand how your life insurance policy can become a key part of your estate plan. 

Learn More About Your Estate Planning Options

When you are looking at different ways to provide for your loved ones when you are gone, you need to give such important decisions the focus and detail-oriented approach they deserve. At the Law Office of Geoffrey Fong, you can work with a knowledgeable estate planning attorney who will assess your unique situation and needs, explain the different options available to you, and help you make well-informed decisions.

If you are seeking guidance regarding estate planning and the role life insurance can play, reach out today to schedule a consultation. The firm proudly serves clients in Rocklin, California, as well as the nearby communities of Citrus Heights, Folsom, and Roseville.