The rich were mostly known for purchasing life insurance to help ease estate taxes because it helped the surviving members avoid paying huge sums of money in estate taxes. However, with the new tax reform act, it’s very tempting for these same people to want to terminate their life insurance. However, this would be ill-advised considering the numerous benefits that one can reap from life insurance. Wondering what benefits these are? Well read on:

  • Disabled children

Family members of children with special needs need special care whose cost might be tough to try and gauge. Additionally, parents have to decide who will care for the child and meet the cost when the primary caregiver passes. Life insurance can solve all this by bankrolling a special needs trust which will provide funds for the services when the caregiver dies.

  • Charitable giving

If a policyholder makes a donation to charity, the life insurance can replenish or replace the inheritance from the large gift. One, the policyholder can choose to give the existing policy as a gift. The charity can use proceeds to buy a life insurance policy based on the donor and pay for the premiums.

Two, the policyholder can give the charity the policy dividends and receive a tax deduction.

  • Spendthrift children

You can handle spendthrift children in multiple ways using trusts and other methods through “control from the grave” language. A death benefit from life insurance can swap assets found in the policyholder’s estate, allowing them to spend down these assets while they’re alive but still ensure that their loved ones will get an inheritance.

  • Privacy protection

Life insurance offers protection from creditors in that the death benefit cannot be accessed by creditors. Additionally, it allows for privacy when distributing funds. Families will not be exposed to the glare of the public. However, the policyholder(s) have to decide beforehand on who has access to the cash value and who gets the death benefit.

  • Succession in business

For some policyholders, their estates may comprise of business interests. Through life insurance, they provide funds for buy-sell agreements to facilitating a smoother transition when handing over from one business stakeholder to another. Life insurance also provides family members with liquidity in case of transition. In the absence of life insurance, the business partners or family members might not have the required liquidity to enable buying out of the estate and this will place a strain on the business or on the family.

Ensure you have the needs of family members with a disability or provide money after you pass away by getting life insurance and this will save your family the hassle of not just paying huge estate taxes, but also have their needs met after you’re gone.