Using life insurance to pay estate taxes and other estate settlement costs preserves other estate assets for distribution according to the owner's wishes. Whether to prevent a forced sale of property (at potentially depressed prices) or provide the extra cash needed to cover final expenses without reducing other family assets, life insurance is ideally suited for estate preservation purposes.

The value of life insurance becomes more apparent when one considers the timing issues surrounding estate settlement. Before estate assets can be distributed to heirs, estate taxes and other estate settlement costs must be paid in cash, generally within nine months of death. As long as it may seem in some respects, nine months is a wink of the eye when the issue involves finding cash to pay final expenses. There are four sources of cash available to pay the estate settlement bill; only life insurance may provide cash on a "discounted dollars" basis*, depending on the client's age and health.

* Refers to annual premium as it relates to death benefit.

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