Life insurance is an extremely important item to consider in the Estate Planning process. Relatively small sums of money spent on life insurance can create or retain a substantial estate. Moreover, life insurance often provides the least painful way to pay estate taxes, due to its tax preferred treatment. Tax advantages include: deferred taxes on the growth of cash values, an income tax-free death benefit and, when set up properly, estate tax-free death benefit. Consequently, life insurance is usually the least expensive and most efficient way to pay estate taxes.

For married couples, the value of life insurance in estate planning can be even greater by using a relatively new type of life insurance called Second to Die ( or Survivorship) life insurance. Since survivorship life insurance pays only after the second death, it is significantly less expensive than life insurance based on a single life. Another way life insurance can be especially beneficial is when used in a Generation Skipping gifting plan to benefit grandchildren. These topics, as well as other estate tax saving plans, will be expanded on in later sections which include Second to Die Life and Gifting Programs.