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Why Life Insurance Belongs in the Estate Planning Conversation

When you think about estate planning, what comes to mind?

If your first thought is that it sounds complicated, you wouldn’t be alone. Many people think estate planning is for only a certain income bracket, but the reality is much simpler. Estate planning, at its core, is a set of decisions that determine what happens to your home, your savings and the people who depend on you.

Perhaps without realizing it, most people already have the beginnings of a plan in motion. If you have life insurance, or are thinking about life insurance, that includes you.

What Is Estate Planning?

Boiled down, estate planning answers a few basic questions:

Which family members or friends receive what when you’re gone?
Who is in charge if you’re ever unable to make decisions for yourself?
Who will look after anyone who depends on you?
How will your bills and expenses be handled?

Having a will can answer these questions, but a won’t control everything you own. Some things, like life insurance and retirement accounts, go directly to the person you named as the beneficiary on the account, no matter what your will says. If that name happens to be out of date or inaccurate, your will does not take precedence.

For this reason, it’s important to remember that estate planning is a broad term encompassing an array of plans and legal documents (including wills) — not just any one thing. In essence, estate planning is more than the sum of its parts.

Life Insurance as Part of an Estate Plan

Adding life insurance to your estate plan helps to ensure a more seamless transition of funds in the event of your passing by covering final expenses, alleviating any ongoing expenses your family may encounter.

While a life insurance beneficiary is often a person, trust or estate, you can also plan for your death benefit to cover funeral expenses. The average cost of a traditional full-service burial in the U.S. is $8,595 in the U.S., according to Funeralocity, with full-service cremation rounding out to $6,253 on average. If unprepared, costs of this size can be a burden on families during an already difficult time. Setting aside funds in your life insurance policy to defray any final expenses ultimately means less worry for your loved ones.

In the case of ongoing expenses, the death benefit of a life insurance policy can be used to keep life moving, whether that means taking care of an elderly loved one or a child with special needs. In some cases, this sort of death benefit would be managed in a trust by a trustee.

Types of Life Insurance Used in Estate Planning

Term life insurance

A term life insurance plan is temporary, offering a fixed premium that provides coverage for a predetermined period, typically 30 years from the issued date. Because it offers a more limited scope of protection, term life insurance policies are often used if finances are expected to come from another source, like investments, and can be used to help cover obligations like mortgages, income replacement, education costs or other financial responsibilities.

Universal or whole life insurance

Permanent life insurance is designed to provide coverage for a lifetime. Universal life insurance offers the flexibility to adjust premiums and the death benefit value for the duration of the policy, while whole life insurance does not. Whichever coverage you choose, both types of permanent life insurance ensure your legacy is covered no matter when you pass away.

Where to Start

Estate planning may seem overwhelming, but you don’t need to have all the answers before having the conversation. A licensed AAA Life Insurance agent can work with you to see how your coverage fits into the bigger picture.

Get a Life Insurance Quote

Last updated on September 10, 2026 by AAA Staff

Sarah Vincelette

Based in Rhode Island, Sarah has been a copywriter and content producer with AAA Northeast since 2021. When she’s not scouring the best spots for all things food and drink or whipping up her own versions of tasty meals, you can often find her in the garden, planning her next trip or sipping on (another) hot coffee.