Estate planning is the process of accumulating and disposing of wealth before death of individual of group of owner known as estate owner including married couple. It aims is to maximize the wealth of the estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner's intended beneficiaries while paying the least amount of taxes. Life insurance if one of the vehicle that can ensure that because life insurance is tax free on hand of beneficiaries.
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I. What is universal fife insurance
Universal life insurance is one of most flexible life insurance that has been around since the early of 1980 and has been used in estate planning process . It contains 2 components: life insurance and investment funds.
1. Life insurance normally used to protect the policy insured's family or company in case of sudden death of the insured. It may be used in estate planning because of its tax exempt status. Since it is tax free, it can use to pay for tax and other expenses that might eat away the estate owner wealth upon his or her death.
2. Investment funds
Investment funds are the most important figure in the universal life insurance policy. The maximum amount is predetermined every year according to state or provincial law. Any growth of the maximum amount deposited into the universal life insurance policy is tax free upon the death of the life insurance.
3. Registered investment funds
It works like other registered pension plan but it is principle guaranteed by insurance company up to 100% upon the death of policy owner.
Upon the death of policy insured, The assets held under his or her mane must be liquidated including any deferred investments, capital gain and tax must be paid before assets can be distributed to the estate. If universal life insurance is one of vehicle was used in estate planning, the life insurance and investment funds are paid to beneficiary tax free can be used to pay for any estate tax, leaving the much large portion of wealth to the estate. That is main reason, it has been used successfully in assisting estate planning.
II. Other figures that benefit the estate owner
1. The investment fund can provide addition income for the estate owner while he or she is alive. Any withdrawal is taxable in the same year
2. Funds can be withdrawn anytime
Universal life investment funds can be withdrawn any time, if it is requested by the policy owner
3. Registered funds can be additional income when your retired
I hope this information will help. If you need more information or insurance advices, please follow my article series of the above subject at my home page at:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
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