A complete estate plan involves a variety of tools and options, and no two plans are identical. For many people, insurance is an extremely important part of their plans. There are several different types of insurance you may want to incorporate into your own estate plan, but there are several that are commonly used by many people.
There are two basic types of life insurance: term and whole. Term life insurance is something you buy every year. Its costs tend to get higher the older you get, and when you die your beneficiaries will receive the benefit. Whole life insurance is essentially term life insurance that has an added savings element to it. The premiums you pay for term life insurance are not added to the value of the policy, while whole life insurance will grow over time. You can use the value you build, typically called cash value, as an investment portfolio and even borrow against it. Whole life insurance, for this reason, tends to be much more expensive than term life insurance.
An important consideration when creating an estate plan is how to designate the beneficiaries of an insurance policy. Consult with an experienced and qualified estate planning attorney before designating beneficiaries.
Long-Term Care Insurance
Long-term care insurance is designed to pay for the costs associated with living in a nursing home or extended care facility. Medicare will only pay for very limited long-term care expenses, while Medi-Cal only applies if you meet certain asset and income limits. If you do not develop a Medi-Cal plan, you can use long-term care insurance as a hedge against possible extended care expenses. Which plan is best for you can be developed by consulting with an experienced and qualified elder law attorney.
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