comes to mind when you think of
property? Typically, it's a house
or condo. Your mind may quickly
wander to leaky faucets or a roof that
needs to be change. Maybe, that's
just me. Any way, most people do
not realize that the benefit of term
life insurance can be thought of as
property in the event of a person
passing away and settling his/her estate.
In fact, it's better on many levels.
Let's look at how
term life insurance
offers all the advantage owning property
but without the leaky roof!
Property is usually thought of as real
estate. Property can in fact be
anything that a person owns and has the
right to use. One of the biggest
assets in today's world when a person
passes away is his/her real estate.
Depending on their age, there may be a
high net value (meaning the mortgage is
paid off and home equities loans won't
swallow the value of the house).
There are two issues. First, loved
ones may need to live in that house.
They can sell that property in order to
generate cash but hopefully the market
favors a seller. There's no way to
insure the timing of this so that's not
a good bet. If your loved ones do
term life insurance protection, they
may be forced to sell that property at a
discount and move to a less desirable
area. This can impact such options
as school quality and just plain quality
of living. Liquidating property or
downsizing is not always the the easy or
best approach. The selling of real
property can also take time and effort.
Even in a good market, it's a
process...a process by the way that
might cost an additional 6% to realtors
in order to transact.
second big issue with liquidating or
selling property is that unless it has
been properly protected through
pro-active estate planning, the property
may be subject to taxes, debts, loans,
and expenses. Probate (the process
of settling estate) is a nasty process
as anyone you has been through it can
that's one kind of property...a common
one that comes up when someone passes
away. What about term life
insurance? Combine all the
benefits of real property without the
pesky tenants or 6% real estate
commission. When a person passes
away and they were responsible in having
term life insurance protection for their
family, the benefit is paid directly
settlement options) to the
term life beneficiary. Let's say
that a person has $500K of term life
coverage. $500K is a lot of money.
It's able to stay "a lot" of money
because it avoids the nasty world of
probate. This benefit is not
in mind that most lump sum sources of
income can be taxed at the highest rate
depending on the amount. This can
be upwards of 50%. That means the
$500K of real property or cash might be
$250K after the government takes it cut.
This is why estate planning is so
important. If you leave property
to chance, you're inviting the
government in with their tax wand.
Poof...disappeared. Built into the
life insurance policy is this
creation of an estate. This
"property" is immediately available.
Literally, the IRS looks at life
insurance as property. It has
maintained the above mentioned benefits
for decades and that is what makes term
life insurance the best kind of property