Life insurance has long been a part of estate planning in the United States. Life insurance can be very useful, especially for parents of young children and those who support a spouse or a disabled adult or child. In addition to helping to support dependents, life insurance can help solve several other common estate planning problems by providing immediate cash upon death.
Here are some questions to ask yourself to help evaluate your life insurance needs:
1. Short-Term Needs
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After you die, how long is it likely to be before your property is turned over to your family?
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What other assets will be available to take care of immediate financial needs?
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Will your estate owe substantial debts and taxes after your death?
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If you are the sole owner of a business, how much cash will it need when you die? Do you want your family or partner to continue the business? If so, do you think there will be enough cash flow for them to successfully maintain the business?
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How many people depend on your current earning capacity over the long term?
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If you died suddenly, how much money would your dependents need, and for how long?
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