Life insurance can provide a death benefit that is often paid income-tax-free to a beneficiary. People use that for income replacement, paying debts, equalizing an inheritance, or leaving something specific to a person or a cause.

It is not a will, a trust, or a complete estate plan. Beneficiary designations and policy ownership matter. So do state law and, for larger estates, tax rules that change over time.

Permanent policies may also have cash value. That feature can be useful in some plans and a distraction in others. Accessing cash value can reduce the death benefit and may have tax consequences.

If you own a business or have a blended family, the “who receives what” question can be more complicated. That is a reason to involve legal counsel, not a reason to skip the conversation.

Mo-Better Fund can help you understand insurance concepts. For legal documents and tax filing positions, work with licensed professionals who can advise you directly.