Is Your Life Insurance About to Blow Up Your Estate Plan

Many people bought life insurance so their beneficiaries will have immediate cash to pay estate taxes, income taxes and other expenses that pop up after they die. The strategy certainly had merit: Pay premiums for a set number of years; then the cash value would generate enough of a return to cover the cost of insurance. In other words, the policy would pay for itself. This, of course, assumed that interest rates would remain high and the stock market would continue booming. However, now that interest rates are next to zero, and the stock market has taken a dump, scores of universal life and variable universal life policies are in trouble. And policy holders are shocked when they’re notified that their policies are about to lapse. This means they could end up paying premiums a lot longer than they ever expected! If you haven’t taken a close look at the policy you bought as an estate planning tool, you might want to dig out a recent statement. Compare the cash value to the projection you received when you were sold the policy. If the numbers aren’t close, contact your agent. And if your agent doesn’t provide an answer you understand, find an independent insurance expert to evaluate the policy for you. Best wishes, George www.e-financialwriter.com