“Is estate planning the same as having life insurance?” — Julie H
They’re not the same thing, but effective estate planning might include life insurance. Good estate planning uses certain legal strategies (wills, trusts, power of attorneys, etc.) coupled with the use of financial tools. These tools might include things like life insurance, long term care insurance, disability insurance, annuities, or other financial products.
Let’s consider the parents of a 10-year-old child. They want to provide money to raise their child and get him through college if they die. If all they do is purchase life insurance, without any will or trust in place, then the 10-year-old will get that life insurance money at age 18, where he may not use it wisely (or for a college education).
On the other hand, by creating a will, the parents can provide instructions about how the life insurance money should be used and who will help the child manage it. By doing this the parents can make sure that their wishes are known and carried out.
Effective estate plans include both financial products (like life insurance), and legal instructions (like a will or trust) to make sure the plan works right. This is why our Wealth Protection Plan process includes a Financial Strategy meeting with the client’s financial advisor.
To continue reading more about life insurance and estate planning, read another Ask the Attorney regarding life insurance for the disabled, here. To learn more about Estate Planning basics, check out one of our free workshops.