Life insurance is probably something you have heard referenced often. But, what exactly is life insurance? Choosing the right life insurance is incredibly important– especially when it comes to creating a comprehensive estate plan and ensuring that your loved ones are cared for in the event of your passing. As a result, you should reach out to an experienced estate planning attorney to discuss your life insurance options to determine what type is best for you and your plans. Read on to learn more about life insurance and how it is a vital aspect of a successful and complete estate plan.
What Is Life Insurance?
In a nutshell, when you purchase a life insurance policy, you are establishing a contract between you and your insurance company. In exchange for regular premium payments during your lifetime, your insurance company will provide your beneficiaries with a lump-sum payment when you pass away. This regularly referred to as the “death benefit.”
What Are the Different Types of Life Insurance?
Different types of life insurance serve different purposes and are for different financial situations. The three most common types of life insurance in New Jersey are as follows:
Universal life insurance: If you purchase universal life insurance, you will have lifetime coverage. These payments are comparatively flexible in that generally, you can lower or raise your premium payments or coverage amounts, however, they tend to have higher premiums than term insurance.
Term life insurance: Term life insurance is generally for those who lose potential income during their working years. This will provide their families with any lost potential income in one lump-sum payment.
Whole life insurance: Whole life insurance, also known as permanent life insurance is for those who want lifetime coverage. The premiums are usually higher than term life insurance and are fixed payments with a cash value, which functions as a savings component and can accumulate, tax-deferred, over time. This type of insurance may help preserve the assets you wish to transfer to your beneficiaries, which makes it a great tool for estate planning.
If you are interested in choosing a life insurance plan that meets your estate planning needs, contact our firm today. We are here to walk you through the process and help ensure that all of your estate planning needs are met and your future is secure.
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.