Should You Leave a Life Insurance Policy to Your Kids?

by Mike on January 1, 2012

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Determining whether or not to purchase a life insurance policy is a big decision.

Many of us want to leave something behind for our family, but there are a few things you need to consider before taking on a monthly premium…

Affordable Payments

The first thing to do is get some life insurance quotes. You need to see how much a policy will cost you to see if you can maintain your payments for the life of the policy. It won’t do you or your beneficiaries any good if you allow the policy to lapse. They will not receive the death benefit and you will not have anything to show for all of the payments that you have made.

Its also important that you talk to licensed life insurance agents when shopping for quotes so that you may avoid being scammed. Unfortunately, the internet is full of insurance scams that promise ridiculously low rates for high amounts of coverage, but will most likely take your money without ever paying your beneficiaries.

Age

For individuals over 50 life insurance is a definite must have. It is pretty essential to make sure that your family is provided for. Kids are one of the biggest considerations that you need to think about. You need to make sure that you leave enough cash behind to cover the cost of a college education and for annual expenses. You do not want to burden your kids with hefty student loans and other bills during their college years.

Tax Advantages

You should talk to licensed life insurance agents to find out the tax advantages that come with a life insurance policy. The proceeds of a life insurance policy are often exempt from taxes when you leave the policy to a family member. This means that you could list a spouse or child as the beneficiary and they could avoid taxes. This gives them more money to use to handle funeral expenses and living expenses.

Amount Of Insurance

The amount of insurance that you purchase plays a big part in determining who you should leave the policy to upon death. For example, you may not want to leave a multimillion dollar policy to your kids. You might have concerns that they will squabble the money and not get the maximum benefit from the cash. In that case, you may want to assign a trustee to distribute the funds so the money is not squandered.

As you can tell, there are a lot of things that you need to think through before buying a policy and selecting beneficiaries. Take the time to shop around and consider everything that you will need in a policy. This way you will be sure that you and your family have no regrets…

*Photo by Kristina Karkov*

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