The death of a family member certainly has a profound emotional effect on the survivors. However, the loss of a family breadwinner can also have a significant effect on the family’s financial well being. With the death of an individual, family members are not only exposed to the emotional loss of the loved one, they are also exposed to the financial loss of that individual’s current and future income. Further, there are many financial obligations that arise in the event of a death, such as paying burial expenses, paying estate fees and taxes, and satisfying the debts (such as credit card and mortgage loans) of the deceased. To protect yourself and your family from the financial risk of an unforeseen death, the most common solution is the use of life insurance.

In addition to the risk protection feature, life insurance can present an excellent shelter from income taxes. This can provide a viable alternative when the use of other tax shelters, such as a company retirement plans, have been exhausted. Further, the use of life insurance is an integral part of any properly planned estate and can be used to significantly reduce estate taxes.