1. Predictable Value – The policy may be structured to pay a known death benefit amount when the insured dies.

2. Value Not Directly Linked To Market Performance – The policy may be structured so that the death benefit may not directly depend on financial market performance. 

3. Liquidity – The death benefits are automatically paid in cash; generally no income taxes, transfer costs, commissions or management fees are subtracted from the death benefit. 

4. Growth/Leverage – Premiums paid for death benefit protection can provide significant leverage in the early years and a competitive rate of return through life expectancy. 

5. Income Tax-Free Payment – Policy death benefits (including the amount in excess of premiums paid) are generally income tax free under IRC Section 101. 

6. Easily Divisible – Death benefits can be easily divided among several beneficiaries; through the beneficiary designation the policy owner directs how the proceeds should be distributed. 

7. Avoids Probate – Death benefits are paid directly to the beneficiaries without the costs and delays that often impact assets distributed through the probate court system. 

8. May Avoid Estate Taxes – Ownership of the policy may be structured so that the death benefits will not be subject to federal estate taxes as part of the insured’s taxable estate. 

9. Subject To Government Oversight – All life insurance policies offered for sale as well as the insurance companies and representatives who sell them must satisfy state standards.   

Each of these advantages is valuable by itself.  The ability of life insurance to deliver ALL these advantages makes it an effective wealth transfer tool.  Wealth transfer planning is something you do for those you love. Life insurance may be able to help you do it even better.