On the other hand, if you accumulated a sizable estate, there may be significant changes that will arise at death. Insurance is one means of providing the liquidity that may be needed to cover them. Life insurance is an ideal financial vehicle since it matures at death. This is exactly when the funds are needed. The annual cost is reasonable and upon receipt, the proceeds are totally free of income tax.
Term insurance is temporary in that it terminates either at a specified age or a given date.
Term plans that end at a given date often have renewal provisions allowing coverage to be continued for another specified period, usually ending at age 65 or 70. Term insurance is best used to protect temporary liabilities or commitments such as mortgages, university expenses, bank loans, etc. Permanent insurance , on the other hand, is the best type of plan to protect long-term needs such as survivor income or estate settlement costs. As a source of funds for the obligations under a buy-sell agreement, life insurance is unsurpassed. Since this is the only asset that matures at death, the funds necessary to carry out the terms of agreement will be available exactly when needed.