It’s important to evaluate life insurance coverage regularly to confirm that you have sufficient insurance in place but not too much to satisfy your insurance needs. Consider the purpose of the life insurance: Is it intended to replace your income? Is it intended to cover estate taxes? Did you buy it to care for minor children who are now grown?
Life insurance should usually be owned by a life insurance trust. Estates are taxed on their value as of the date of an individual’s death. If someone owns a policy on her own life, the value of that policy as of the moment of death is equal to the policy proceeds – all of which will be included and, potentially taxable as part of her estate.
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