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How Can I Build and Preserve My Estate? Building an estate can take years of diligent saving and investing. Once you have built up an estate, you’ll want to make sure that you preserve its value for your heirs. You can also add to or create a valuable estate by using life insurance. Why Create an Estate? Premature death can result in financial difficulties for your survivors. By using life insurance to protect against this outcome, you can rest assured that your heirs will be cared for financially in your absence. If you wish, you can also ensure that other financial goals are achieved. Because the premature death of a breadwinner could make college savings or mortgage repayment impossible, steps should be taken to prepare for these possibilities. Life insurance provides a cost-effective way to guard against the threat of interrupted financial goals. A Case Study The following example illustrates the concept of estate creation. Paul Pringle, a 40-year-old computer programmer, would like to begin a savings program. He and his wife, Pam, have two children, ages 10 and 8. He feels he can afford to save about $2,000 per year. For approximately this annual amount in premuims, he may be able to purchase a $200,000 variable life insurance policy. He could choose a flexible premium, and his cash value would be allowed to grow tax-deferred. Paul would have penalty-free access to the cash value through policy loans or withdrawals.* And in the event of Paul’s premature death, his family would receive the policy proceeds free of income tax. The proceeds would help to maintain his family’s standard of living, and it could ensure a college education for both of their children. Financial Leverage In the unfortunate event that Paul dies prematurely, his policy would generate a significant amount of cash. For a potentially low premium investment, Paul can create an estate that might otherwise take 20 to 30 years to accumulate. Life Insurance: A Clear Advantage The security provided by life insurance, combined with the opportunity to create an estate, makes this choice a logical one for many families. Consult an advisor to see how you can achieve financial security for your family. * Please note that policy loans and/or withdrawals will reduce the policy's cash value and death benefits. This material was written and prepared by Emerald Publications. EC21911 (8/01) |