You may have heard the term life insurance before without exactly knowing what it refers to. Put simply, it is a contract between you and your insurance company. And, you may not exactly know life insurance’s significance in the estate planning process. However, this concept does not have to be as complicated as you may think. Continue reading to learn about life insurance policies and estate planning in Maryland and how an experienced Montgomery County estate planning attorney at JDKatz, P.C. can help make this a seamless process.
How are life insurance policies intertwined with estate planning?
When you have passed on, your insurance company will refer to the contract that is your life insurance. With this, they will give your beneficiaries a lump-sum payment or regular payments in exchange for premium payments that you made while you were alive. These payments are commonly referred to as death benefits.
What are the different types of life insurance policies in the state of Maryland?
The state of Maryland recognizes three main types of life insurance policies. For one, there is universal life insurance. This gives the insured party lifetime coverage. This is a flexible policy, so you as the policyholder can raise or lower your premium payment or coverage amounts throughout your life.
Additionally, there is term life insurance. This policy usually comes with lower premium payments than that of universal life insurance. This is best if you are someone who lost potential income during your working years, because this policy will essentially replace this lost income. That said, your beneficiaries will receive one lump-sum death benefit as opposed to regular payments.
And lastly, there is whole life insurance. With this policy, you are essentially purchasing permanent life insurance that provides lifetime coverage. These payments are fixed, and like universal life insurance, typically come with higher premiums. Notably, the cash value of the payments will work as a savings component and will accumulate, tax-deferred, for your beneficiaries.
When will my beneficiaries receive life insurance payments?
Life insurance claims will likely be processed within 60 days from when you have passed on. But, if your beneficiaries have the appropriate paperwork ready at hand, then their claims can be processed as quickly as within 14 days.
Keeping all of this in mind, it is best that you set up your life insurance policy sooner rather than later, for your sake and your loved ones’ sakes. If you still require further guidance, do not hesitate in reaching out to a skilled Montogomery County elder law attorney at your earliest convenience.
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Our firm has experience with matters of estates & elder law, business law, tax law, and litigation. Contact JD Katz, PC today for assistance.