Life insurance can be an important tool to help provide for your family's income and expenses should an unexpected death occur, but did you know you can also use it to fund your legacy goals? Whether you want to provide an inheritance for loved ones or gifts to charity, permanent insurance could offer you flexibility and certainty that you'll reach your legacy goals.
Who can benefit from this strategy?
- Wants to leave a specific dollar amount to heirs or charity
- Wants a tax-efficient way to transfer wealth
- Owns a business
- Owns real estate, farmland or other assets that cannot be divided easily among heirs or charities
The amount and type of permanent insurance you choose will depend on your goals and situation.
What legacy do you want to leave?
Goal: Leave specific financial assets
If you want to leave a savings account, stock or other financial assets to your heirs or charity, typically the best strategy is to continue to own these assets throughout your lifetime. This allows you to benefit from any income they generate and have the flexibility of accessing them if you need to.
If you have a gap between what you have saved and the amount you'd like to leave behind, life insurance can provide the funds to fill that gap. It can also preserve your assets in the event of your illness or other significant, unexpected costs, helping ensure you can leave behind the amount you intended.
Goal: Ensure you leave a specific dollar amount to your heirs or a charity
If your desire is to ensure you leave a specific dollar amount to your heirs or a charity, permanent life insurance may be a solution. You could fund a permanent life insurance policy where the death benefit of the policy matches the amount you would like to leave. This would provide certainty that this amount is available to your heirs or charity when you pass away.
Goal: Have greater flexibility when transferring assets
Some assets (for example: a business, real estate or farmland) can't be easily divided among heirs or may require ongoing maintenance costs. In these situations, permanent life insurance can provide you the flexibility to:
- Leave specific assets to one beneficiary while leaving an equivalent value in life insurance proceeds to others
- Provide additional money for your beneficiaries to pay ongoing maintenance costs of property or a business, including taxes, insurance, operating costs or other day-to-day expenses
- Provide liquidity in a tax-efficient way to pay capital gains tax and transition a business at your passing
Goal: Provide ongoing care for a loved one
If you're the primary caregiver for someone with special needs, life insurance can help ensure your loved one continues to be well-cared for after you pass on. Make sure you work with a qualified lawyer to explore opportunities to create a trust or trusts to manage the assets on your loved one's behalf.
Is this strategy right for you?
There are many factors to consider when using life insurance to fund your legacy goals. Your Edward Jones financial advisor can look at your entire financial picture and work with your legal and tax professionals to help you decide if this approach is right for you.
Together, you can talk through the answers to these questions:
- Which type of permanent policy is right for you (if any)?
- How much life insurance do you need and can you afford?
- Are you insurable?
- How much flexibility do you need?
Your financial advisor can provide a quote so you can have the information you need to make the best decision. To get started, contact an Edward Jones financial advisor today.
Insurance and annuities are offered by Edward Jones Insurance Agency (except in Québec). In Québec, insurance and annuities are offered by Edward Jones Insurance Agency (Québec) Inc.