Life Insurance for Estate Planning
How is life insurance used for wealth transfer?
Life insurance is one of the most efficient wealth transfer tools available. The death benefit passes income-tax-free to beneficiaries. An irrevocable life insurance trust (ILIT) can also keep the death benefit out of the taxable estate, allowing it to pass estate-tax-free.
Key Points
- Death benefit: passes income-tax-free to beneficiaries
- ILIT: keeps death benefit out of the taxable estate
- Efficient wealth transfer: life insurance leverages premium dollars into a larger death benefit
- Second-to-die life insurance: insures two people, pays at second death
- An independent agent can help you design a wealth transfer strategy with life insurance