Choosing the Right Life Insurance for Estate Planning

Life insurance for income replacement should be as much as you need. Ideally, a 20-year level term insurance is a pure insurance product that will cover your needs for the next 20 years. For estate planning purposes, either to leave a larger inheritance to your heirs or to cover estate tax expenses (this is for those who are high net worth and have implemented all tools available to avoid high estate taxes, then permanent insurance would be wise). Term life insurance does not last for lifetimes.

As for special considerations, first is cost and benefit. Permanent products are 5-10 times more expensive than pure term insurance products. While permanent insurance has a savings element as a feature, a million policy may cost $7,000 as a permanent policy while a 20-year level term may cost $1000. While insurance can be a savings tool, if you need the insurance buy the coverage that you need. A savings feature in a policy is of no value if paying the premium causes a hardship.