How Ethos Life Insurance Fits into a Comprehensive Estate Plan

Introducing Life Insurance, the Unsung Hero of Estate Planning

Life insurance can be surprisingly useful for financial, tax, and emotional needs. However, most life insurance companies force you to go through tons of paperwork and medical exams before you can acquire coverage. This makes the process of buying life insurance a lot more stressful.

Ethos is a life insurance company that understands how challenging it can be to estate plan and buy life insurance. Ethos offers life insurance that integrates seamlessly into your estate plan, helping protect your loved ones and preserve your legacy. In this guide, we will go over how life insurance helps with estate planning, the value of Ethos, and how to strategically obtain the best life insurance.

The Role of Life Insurance in Estate Planning

Life insurance’s main purpose is to provide a significant death benefit, which can be immensely helpful for your loved ones. But did you know life insurance isn’t just about income replacement? It can also ensure your estate plan works smoothly and reduce tax or debt burdens. Here are the key roles of life insurance in estate planning.

Fast liquidity

Life insurance policies come with death benefits, which is a lump sum of money. This provides immediate liquidity for your heirs and estate in case you pass away.

Debt payoff

The death benefit can help your family pay off debts, taxes, and final expenses. This is particularly important for expenses such as funeral and mortgage. If your family cannot afford the mortgage, they may lose the real estate.

Funds trusts and gifts

Death benefits from life insurance policies can go towards funding trusts or charitable gifts.

Equalizes inheritance

A life insurance policy could help equalize inheritances among heirs. The life insurance policy can provide an exact, known amount of money at an exact time. This lets you equalize your estate distribution easily since you can accurately predict how much money your estate will have.

Essential: Life insurance fills the financial gaps that wills and trusts alone can’t cover.

Why Ethos Life Insurance Is a Perfect Fit

Like all life insurance products, you need to know the details before committing. These contracts are long-term and last for years, or even decades. Let’s go over the main advantages of choosing Ethos over other life insurance companies.

Fast, Online Application Process

Ethos has neither lengthy paperwork nor in-person exams for most applicants. That means a lot less stress.

You can even receive life insurance approval in minutes, which is perfect for busy professionals and families who just want to ensure they get covered ASAP. People could finish getting life insurance through Ethos before they finish reading this article.

Affordable Coverage Options

Ethos offers flexible term and whole life insurance plans. Term life insurance has fixed terms. Ethos offers several term life policies for people aged 20-65, and a guaranteed issue whole life product for anyone 65-85.

Compared to other life insurance companies, Ethos may have fewer plans available. However, Ethos offers competitive rates designed for accessibility at every life stage, and generally you are able to easily find a suitable plan for you.

Transparency and Simplicity

Ethos makes it straightforward and easy to obtain life insurance. No hidden fees and clear explanations mean you can feel more assured when buying life insurance for the first time. Ethos is particularly good for people new to estate planning and barely have a will, much less life insurance.

Trusted Underwriters

Ethos is backed by top-rated insurance carriers for financial stability and reliability. This is important because it ensures your beneficiaries can actually receive the promised death benefit upon your death.

Integration with Estate Planning Goals

Ethos works seamlessly alongside wills, trusts, and other estate tools. We highly recommend those planning their estates to draft a will through LegalZoom and consider Ethos life insurance products for excellent legacy and asset protection.

How Life Insurance Strengthens an Estate Plan

Immediate Liquidity for Heirs

Estates can take months or even years to settle via probate court. Life insurance provides cash right away, which is crucial for families where you are the sole or main income earner.

The liquidity from life insurance claims can pay for funeral costs, mortgage payments, or daily expenses while assets are still tied up in probate.

Paying Estate Taxes and Debts

Federal and state estate taxes can reduce what heirs receive. Life insurance proceeds can cover these costs without forcing heirs to sell assets.

Protecting Family Businesses

Policy proceeds can fund buy-sell agreements or keep operations running during transition. This helps prevent forced sales or loss of ownership.

Equalizing Inheritances

Life insurance can balance estate value. For example, if certain heirs receive physical assets (like property or a business), others can receive an exact, fair amount of money from the life insurance death benefit.

Funding a Trust

You can use an Ethos life insurance policy to fund a revocable living trust or Irrevocable Life Insurance Trust (ILIT). This can protect the life insurance proceeds from estate taxes and ensures long-term management of funds. However, be aware that irrevocable trusts cannot be easily modified. You would need a court order and/or beneficiary consent.

The Strategic Use of an Irrevocable Life Insurance Trust (ILIT)

An Irrevocable Life Insurance Trust (ILIT) is specifically designed to own and manage a life insurance policy outside of your taxable estate. Trusts are optional parts of estate plans, and irrevocable trusts require a court order and/or beneficiary consent to modify. Because of this, ILITs aren’t suited for every estate plan.

If you buy an Ethos life insurance plan, you (the grantor) can have it attached to your trust. The trust (not you) owns the Ethos policy. Upon your death, the life insurance proceeds go directly to the trust beneficiaries.

The funds are distributed tax-free and avoid probate court. To dive deeper, let’s go over other possibilities of a properly set up ILIT.

Reduce estate taxes

Estates with larger than a certain amount of funds can be taxed heavily (usually around $13.9 million). If you use an irrevocable trust, you may be able to reduce the tax burden on your estate.

Protect assets from creditors

It is much harder for creditors, plaintiffs from lawsuits, and other financial threats to affect your assets if they are placed into an irrevocable trust. This is because technically you won’t be the owner of the assets anymore—the trust is.

Provide structured distributions for beneficiaries

You can give your trust special conditions and clauses so that your asset distribution is more personalized and private. For example, you might want the assets to be distributed in a staggered way to beneficiaries who have poor financial habits.

Example setup: It can be beneficial to pair an Ethos policy with a LegalZoom-drafted ILIT, which creates a powerful, cost-effective estate strategy.

Tailoring Ethos Life Insurance to Different Life Stages

Ethos life insurance can be useful across all life stages.

For young families, Ethos death claims can help replace decades of income, covering massive childcare and education costs. The life insurance can protect your spouse and children’s financial stability, ensuring they will still be able to afford tuition, rent, groceries, and other essentials.

For mid-life professionals, Ethos is particularly useful for paying off mortgages or business loans. It prevents your family from having to deal with forbearance, credit score drops, or other problems.

Retirees and estate builders, particularly those with substantial wealth, can ensure liquidity for heirs to cover taxes and maintain inherited assets. Ethos can also support charitable giving goals or multi-generational wealth planning (e.g. dynasty trusts).

As for business owners, Ethos can fund succession plans or buy-sell agreements. This provides additional security for business partners and employees.

How Ethos Works with LegalZoom and Other Estate Tools

Estate planning tools are excellent for those who aren’t sure where to start with estate planning. Many people can benefit from LegalZoom, an estate planning online tool that lets you draft (valid!) wills, trusts, and powers of attorney. These documents can easily align with your Ethos insurance coverage, which makes the estate planning process much easier.

Essentially, LegalZoom secures your wishes legally while Ethos provides the funding to make those wishes possible. Many families use LegalZoom to set up a trust and name the trust as beneficiary of their Ethos policy, which allows them to avoid probate and protect minor children.

How to Integrate Ethos into Your Estate Plan: Step by Step

1. Assess Your Financial Needs

Calculate the needed income replacement, debt payoff, and legacy goals. It’s generally recommended to choose coverage with at least 10x your income.

2. Choose the Right Policy Type

Term life insurance is better for affordability and flexibility. Whole life insurance is for permanent coverage, cash growth, trust funding, and tax advantages (particularly for larger estates).

3. Designate Beneficiaries Thoughtfully

Coordinate with your will or trust to avoid inconsistencies. If your will says your life insurance should go to your child, but your life insurance says it should go to your spouse, it can cause conflict later down the line.

4. Update Your Estate Documents

Reflect the policy and beneficiaries in your legal paperwork. Make sure to reevaluate your life insurance coverage after major life changes, such as marriage, new child, home purchase, and divorce.

5. Ensure proper storage

Make sure your Ethos information is accessible to your executor, trustee, or any other relevant people.

Common Mistakes to Avoid

Life insurance isn’t for everyone. It is also significantly worse if you make any of the following mistakes.

Naming the wrong beneficiary

Many people forget to update their life insurance beneficiaries after major life or relationship changes. This is because when people are celebrating new children or frustrated by divorce, life insurance often becomes an afterthought. Remember to review your estate plan regularly to ensure you’ve listed the right beneficiaries.

Letting the estate be the beneficiary

Who you designate as the beneficiary of the life insurance policy can make a big difference. Generally, you want individuals or trusts to be named the beneficiary.

Buying too little coverage to meet long-term needs

Life insurance plans come with different death benefit claim amounts and features. Consider your family's total income and monthly budget. Generally, people buy life insurance worth 10x their income.

Failing to integrate the policy with your overall estate plan

Ethos makes buying life insurance a breeze. Still, estate planning is a big deal. We recommend looking over your policy and overall estate plan for maximum synergy.

Not informing your trusted people

You need to tell your executor, trustee, and attorney about your policy’s location and details.

Pro tip: Ethos makes policy management easy. Digital access means your loved ones can locate documents quickly when needed.

The Benefits of Choosing Ethos for Estate Planning

Speed and simplicity

The best benefit of Ethos, in our opinion, is that you can apply online and get covered in minutes. Other life insurance companies make you go through seemingly endless medical exams and questionnaires.

Affordability

Ethos offers flexible options to fit nearly any budget. While similar coverage may cost slightly more at Ethos compared to a budget life insurance company, it is typically worth it for a no-hassle, fast process.

Minimal to no medical exam

Most applicants do not need to go through a medical exam with Ethos.

Security

Ethos is backed by trusted insurers with strong financial ratings.

Compatibility

Ethos works seamlessly with online estate tools like LegalZoom and Trust & Will. It also combines easily with your existing legal documents.

The Future of Estate Planning: Digital Simplicity Meets Financial Protection

Have you seen TikTok promotions of life insurance plans? It’s true. Estate planning is becoming more digital, streamlined, and accessible. It is no longer only for the wealthy.

Ethos makes one of the most important components of estate planning, life insurance, easier to obtain and manage.

Paired with tools like LegalZoom, Ethos helps you build a complete estate plan online in hours. You can save months of stress with this combo.

Protect Your Legacy with Confidence

Life insurance helps with financial stability and estate planning. It’s a hidden cornerstone that can benefit a lot of estate plans, especially if you are a major income earner for your family. But we understand life insurance can be frustrating to purchase.

Ethos takes the complexity and cost out of life insurance so you can focus on what truly matters: protecting your loved ones and your legacy.