There are ways to make sure life insurance proceeds don’t become a part of your estate.
First of all, if you are in a position to buy additional life insurance, meaning more than what you currently have, not only will you likely save money on the premiums, but you will have the opportunity to put that policy (or policies) into an irrevocable trust. The main reason for doing that is to make sure the proceeds of that policy or policies are not taxed leaving the beneficiaries with less money than they would need to survive.
Chances are that since you last bought a life insurance policy that rates have jumped substantially. The fact is if you check online you’ll find out that premiums have actually shot up anywhere from 10% to 15%, a significant hike. This may be a deal breaker for some people, but one needs to remember that either way with higher premiums or the prospective buyer being older, the premiums are going to be high.
This means shopping about for the best rate right now and not waiting another six months or so to make a decision. The longer people wait to buy extra insurance, the higher the costs. That’s a fact of doing business during a recession. Prices won’t drop and one can pretty much guarantee they will continue to rise, so acting quickly may offer the better deal on life insurance premiums.
Figuring out how much coverage is needed is a bit like a game of Russian roulette – it’s hard to know what the outcome will be. Generally speaking the rule of thumb is that people should buy five to 10 times their income in coverage. This may be too small for some people and they may opt to bump that figure up to 20 or even 30 times their income for coverage. This of course is an individual decision based on the family’s circumstances and future plans.
If the policy is supposed to be owned by a trust, speak to an attorney who will outline how the process is initiated and ultimately achieved. It’s usually best to set up the trust first and then apply for the life insurance. Setting up a trust does tend to take some time, so if this is something worth doing, take the time to do it right the first time so there are no glitches further down the road.
There are a few things needed to set up a trust – a separate bank account to fund the trust and an employee identification number obtained from the IRS, and a few other legal documents. Entrust this process to an attorney and save the major headache it will generate.
Once the new additional life insurance policy has been bought (and the trust fund all ready to roll) the good news is that it is really easy to transfer any other life insurance policies into the trust. This protects a person’s estate from being unnecessarily taxed – for now that is. No one really knows what will happen with estate taxes in the future, so be safe now because if things change, what is in place now will likely be grandfathered.
To learn more about Florida health insurance, Florida health insurance quotes, Florida life insurance,Florida life insurance quotes, Florida group health insurance visit Floridahealthcareinsurance.com.