Life Insurance Vs Wills

Making plans for what will happen to your assets and estate once you pay away is, of course, important. Many people create a will in the middle of life that they can add to or change from time to time. Because we never know what is around the corner, having life insurance and/or a will help your peace of mind for the family when you die.

Life Insurance

This is between an insurer and policy holder which makes it a little different to a will. What happens is that a sum of money is paid out upon death. These are legal contracts and give peace of mind to policy owners.

Nobody wants to think about death, but if you have children and/or a partner then it is recommended. What happens is that you choose between term and whole of life insurance and this means that a lump sum will be paid after your death. It helps for things like:

  • Mortgages
  • Helping the family replace your salary
  • Childcare
  • Educational costs
  • Day to day expenses
  • Funeral

There are a number of options and various companies that offer this. Understanding what cover you need is a case of tallying up your commitments, debts and dependents although many suggest that it should be 10 times your salary.

Wills

We all know what these look like. Able to be created by anyone “over the age of majority” this is a legal declaration detailing the management of an estate following death. Without a will then the law decides where the estate goes. The upshot of that is that a will isn’t written then any possession, money and property may not be given out as you would have liked, while if you haven’t updated one recently then a will dispute can break out as a result.

With a plan, you will be able to lower the liability of inheritance tax so that your family won’t have to pay overs the odds. If there is someone treated as an “exempt beneficiary” then no inheritance tax will be paid, although that will lead to future tax liability when they die. Similarly, you can cut down on tax by giving assets or money to a charity when you pass away.

Which is more important?

Both forms are integral for helping your family recover following your passing. No matter whether you want to think about it or not, knowing what is going to happen when you go is great for peace of mind. Holding life insurance means that money will be made available while keeping a settled will means that your assets are left to whom you want.

With this in mind, both are worth having simultaneously and it is possible to put your life insurance in trust so that your payout works the same as the rest of your will.

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