estate planning with life insurance -- family of mother, father, and three children sitting on a grass and hugging each other

Is Your Life Insurance Included in Your Estate Plan?

An estate plan protects your finances and assets so they can be managed the way you want them to be after your death. While most people who come to Phelps LaClair know that an estate plan should include assets like their house, vehicles, and investments, it’s a surprise to many to hear that their life insurance can also be part of their estate plans. Here’s a further explanation about the benefits of estate planning with life insurance.  

How Estate Planning with Life Insurance Works

Life insurance provides extra protection for your family if you die unexpectedly. A life insurance policy will pay out a specific amount of money to your beneficiaries after you pass. That amount is the face value of the policy you purchase. 

Generally speaking, a life insurance payout is a non-taxable income for your beneficiaries. The funds from your life insurance policy can be used to pay for a variety of things, including: 

Benefits of Estate Planning with Life Insurance 

There are several ways in which life insurance and estate planning make an excellent combination. Life insurance can be used for paying off estate taxes and providing additional funds to your beneficiaries. It also offers you an additional option for investing in your family’s future. 

Pay for Estate Taxes

Depending on the value of your estate, the federal government may impose death taxes, leaving your loved ones with a hefty bill. Money from a life insurance policy provides your beneficiaries with the cash they may need to pay for any estate taxes. 

Immediate Funds

Depending on the size and terms of your estate, it may take some time for beneficiaries to receive access to money through your estate plan. Sometimes funds become available more quickly through a life insurance policy. This can be very helpful when loved ones need to pay for final costs during what’s an already emotional and stressful time. 

Additional Investment Option

Individual retirement accounts (IRAs) and 401Ks are usually the investment options people turn to when they want to provide for their loved ones. However, there are limits to how much you can place in each of these investment opportunities each year. A life insurance policy gives you another tax-free way to support your family.  

Estate Planning With Life Insurance In Arizona

When you look at all the benefits it offers, including life insurance in your estate plan makes a lot of sense. It provides another way to take care of your loved ones after you are gone. This allows you to have the peace of mind you need to enjoy the rest of your life. 

If you have more questions on how estate planning with life insurance works, the experts at Phelps LaClair are here to help! Call our offices today at 480-892-2488

Photo by Migs Reyes on

Next webinar
starting soon
Free Webinar