Life insurance can help your estate plan. Some of my clients are younger, or not so young, and do not have much in their estate. They may not have a lot of money or savings. One way to put a lot of cash into your estate is an adequate life insurance policy. It does not have to be complicated. A regular term life insurance policy is fine. I have one myself for my family.
What the money does
When you pass away, the life insurance company writes a check to your family or, better yet, to your living trust. That money can help educate the kids, help your spouse and pay off debts and the mortgage. Think of it as income replacement if you pass away. Life insurance is a very good tool for that.
If you have minor children
The best approach is to make the life insurance payable to your living trust. Then the money can be protected for your children and used for appropriate purposes such as health care and education. Making it payable directly to your children can be a problem. The insurance company is not going to write a check to the kids, and you do not want your children to have full access to that money at 18, when they are technically adults.
Questions to ask
Life insurance is a very good way to put cash into an estate when you do not have much cash lying around. Ask yourself how the money will flow into your estate and how it will be managed. When do your children get the money, and under what circumstances?
Read another article about life insurance and estate planning.