An essential component of estate planning and development is the option for a protective life insurance policy which is an extremely effective and cautious step to enhance the financial stability of an individual. In several such life insurance corporations, the funds get wasted due to the inability of proper designation and structuring of ownership and beneficiaries. Thus one needs to be extra cautious while taking steps about this policy.
Advantage of opting for this policy:
A steep rise is seen after opting for this policy. There is a clear reason for such a hike. When a person takes up this insurance in his estate name as a beneficiary, the demise benefits automatically increase the company’s value. Such benefits are very easy to be diverted towards any beneficiary without any need for payment of estate tax liabilities. Sometimes the exempted amount of state tax may fall short of some of the estate’s value and protective life insurance death benefit funds. In that case, no assessment shall be done of federal estate. Now, when someone has a property that value exceeds the amount of specified estate tax amount, which is liable to exemption, then the estate you have is taxable. With protective health insurance expats or having specified someone judiciously a beneficiary, one automatically paves the way of estate taxes.
On assignment to third party or spouse:
When this is owned by someone else, the protective life insurance policy is the best option. If required, one may file a petition for becoming the primary owner through binding trust. However, keep this in mind that the person who is included as a beneficiary should be an adult above 18 years of age. It is preferable to assign it to a third party reason being it may help in the process of avoidance of inclusion of the contribution amount about the property as well as with those owners, the tax liability may be reduced by the cash provided due to reduced burden.
Sometimes after taking the protective life insurance policy, people get their husband or wife as the case may be, in such case if the spouse of that person meets an untimely death. The insurance policy should not get directed towards that person by way of any living trust or any kind of will. This point should be kept in mind after making the spouse an assignee.