by Timothy Cummuta

Created on: August 10, 2009   Last Updated: August 11, 2009

Today the competitive life insurance market has driven prices down to the point where it makes no sense not to own some form of life insurance.

There are far too many forms of life insurance available today to cover in this article so we will only deal with two basic forms; Traditional life insurance typically used to cover estates and/or assets, and Final Expense insurance often call "Burial Insurance". The key concept to remember with any form of life or health related insurance is the younger you are when you purchase it the cheaper it is and the easier it is to qualify for. Too many individuals wait until something happens and then they see the need for these insurance products when all-too-often they will no longer qualify for it. The wise individual sees the potential need before it becomes a necessity.

Traditional Life Insurance

Traditional life insurance plays a fundamental role in estate planning. An estate is basically everything you own. Life insurance can provide the necessary liquidity to cover estate needs when the covered individual passes away.

When a person passes away their estate goes into probate. If there is a lawful will in place then the estate is probated in accordance with the directions of the will. If there is no lawful will in place, then the estate is considered intestate and the courts probate the estate in accordance with their individual governing laws. In either case the estate will have at least court costs and other legal costs to bear. If you have no lawful will and you planned on leaving some of your estate to anyone outside of your immediate family members, i.e. a charity, it will most likely not happen without a will. Life insurance under current laws passes to the beneficiaries without going through probate. This means a charity can be the beneficiary of your life insurance if you so choose with or without a will. And, as long as the life insurance beneficiary is not the estate of the deceased the benefit will also pass tax-free.

Life Insurance a Bridge to an Estate

Suppose you want to leave an estate to your loved ones, but have not had enough time to build that estate yet. Life insurance can provide a bridge to an estate before the estate has had time to build. When you're young, your most valuable asset is your personal ability to earn income. This is called your potential human capital. As time goes by, you invest, save and build assets that take the place of your potential human capital so that when retirement

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