When originally conceived, the primary purpose of life insurance was to provide capital to offset an economic loss resulting from a death. This basic and traditional purpose of life insurance continues to be very important today.
The death of a family’s primary wage earner can wreak financial havoc on the survivors. Even if a surviving spouse is gainfully employed, he/she may still need income protection after the death of the first spouse.
The death of one spouse usually does not significantly decrease the financial needs of a surviving spouse and their children. Generally speaking, mortgage debts, real estate taxes, car loans, educational costs and other expenses are still due after the death of one spouse. Moreover, surviving spouses will likely be more conservative in their investment strategy, which will reduce investment income and/or growth potential.
Life insurance, which was originally created as an income replacement financial product, is often the solution to the foregoing issues, and survey after survey continues to confirm that the vast majority of Americans are woefully underinsured.
There are many different types of estate planning issues that could arise depending on the specific facts and circumstances of a particular situation, and while all such issues typically have more than one estate planning solution, life insurance will often be one of the most efficient and effective solutions to many planning issues.
An experienced estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, and that could include a need for life insurance.