Future-Proofing: Why Life Insurance is Crucial for Estate Planning, Even in Your 20s and 30s

Insurance, in all its varied forms, is simply a method for handling risk. In order to plan an effective insurance program, consider the risks that you and your family are exposed to and how financial loss could affect you.

Acord & Fong Wealth Strategies, https://acordandfong.com/insurance.html

By Realttorney®

One of the primary reasons why life insurance is crucial for young people as an estate planning tool is to provide financial protection for dependents. Many young individuals have dependents, such as spouses, children, or elderly parents, who rely on their income for financial support.

If a young individual unexpectedly passes away, it can have severe financial consequences for their dependents. The death benefit from a life insurance policy can provide much-needed financial support to cover living expenses, pay off debts, and ensure that the dependents can maintain their standard of living even in the absence of the insured individual’s income.

For young parents, life insurance is particularly vital as it can safeguard their children’s financial future. Parents often have significant financial responsibilities, including mortgage payments for their house and vehicle, childcare expenses, and education costs.

In the event of the untimely death of a parent, the death benefit from a life insurance policy can help cover these expenses and ensure that the children’s financial needs are met. It can provide a safety net for the surviving parent or guardian to continue supporting the children without experiencing financial difficulties moving forward.

Life insurance can also serve as a valuable estate planning tool for young individuals who have financial responsibilities toward aging parents or other family members. Many young people find themselves in a position where they are financially supporting elderly parents, siblings, or other family members.

In the event of their death, the financial support may come to an abrupt halt, leaving the dependent family members in a problematic situation. Life insurance can provide the necessary funds to ensure that the financial needs of these family members are met even after the insured individual’s death.

In addition to protecting dependents, life insurance can also be used as a tool for wealth preservation and transfer. Young individuals who have accumulated assets, such as a business, real estate, or investments, may have concerns about the potential tax implications and liquidity issues upon their death.

Life insurance can help address these concerns by providing the necessary liquidity to cover estate taxes, debts, and other expenses without having to sell the assets at a potentially unfavorable time. This can help preserve the value of the assets and ensure that they are transferred to the intended beneficiaries in a smooth and efficient manner.

Furthermore, life insurance can also be used as a means of equalizing inheritances among beneficiaries. In cases where an individual wants to leave different amounts of assets to different beneficiaries, life insurance can be used to provide additional funds to beneficiaries who are receiving smaller inheritances. This can help ensure that each beneficiary receives a fair and equitable share of the estate, even if the assets are not equally distributed among them.

Still unconvinced? Here are a few more points to entice young people to consider life insurance and estate planning early:

Lock in Lower Premiums: One significant advantage of obtaining life insurance at a young age is that premiums are generally lower when you are young and healthy. By locking in a life insurance policy early, young individuals can secure lower premiums for the duration of the policy, potentially saving thousands of pesos over the life of the policy. Waiting until later in life to get life insurance may result in higher premiums due to increased risks associated with age and health conditions.

Financial Protection Against Debts: Young people often carry various debts, such as consumer loans, credit card debts, or mortgages on vehicles and real estate. In the event of the insured individual’s death, these debts could be passed on to their loved ones, creating financial burdens. Having a life insurance policy can provide a financial safety net to cover these debts, preventing them from becoming a financial burden on surviving family members.

Supplement Employer-Provided Coverage: Many employers (like BPO Companies) offer group life insurance coverage as part of their benefits package. However, these policies may not provide sufficient coverage to meet an individual’s specific needs. Additionally, group coverage typically ends when an individual leaves their job. By obtaining an individual life insurance policy early, young individuals can supplement their employer-provided coverage and ensure that they have adequate protection regardless of their employment status.

Long-Term Savings and Investment Tool: Some types of life insurance, such as variable life insurance, not only provide a death benefit but also accumulate cash value over time. This cash value can serve as a long-term savings and investment tool that can be accessed during the insured individual’s lifetime. Young individuals – freelancers, solopreneurs, and digital nomads – can leverage this feature to build a source of tax-deferred savings that can be used for various purposes, such as supplementing retirement income or funding future financial goals.

Protecting Insurability: Life insurance is typically easier to obtain when an individual is young and in good health. However, life circumstances can change, and health issues may arise, making it more difficult to obtain coverage in the future. By obtaining life insurance early, young individuals can lock in coverage and protect their insurability, ensuring that they have financial protection in place regardless of their health status later in life.

Peace of Mind for Loved Ones: Planning for the unexpected is an act of love for one’s family and dependents. Knowing that loved ones will be financially protected in the event of the insured individual’s untimely death can provide peace of mind. Life insurance can offer a sense of security and comfort, knowing that loved ones will be taken care of financially, even if the insured individual is no longer around.

In conclusion, life insurance is a crucial estate planning tool for young people that offers financial protection, wealth preservation, and peace of mind. It can provide a safety net for loved ones, protect against debts, and offer long-term savings and investment opportunities.

Obtaining life insurance early can also result in lower premiums, protect insurability, and supplement employer-provided coverage. It is never too early to start planning for the future and protecting the financial well-being of oneself and loved ones.

Taking proactive steps now to include life insurance as part of one’s estate planning can help young people build a solid financial foundation for their future and ensure that their loved ones are protected. We encourage consultation with a qualified financial advisor or insurance professional who can help young individuals understand their specific needs and explore the best life insurance options to suit their circumstances.

Email us [attyjojo@realttorney.com] to get a free 30-minute consultation about your insurance and estate planning needs.

Image source: http://www.epdv.com/


Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives.

Published by Atty. Jojo

A loving husband and devoted father; a gentleman farmer; a licensed real estate broker; a real estate & estate planning attorney; and a practicing Catholic.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: