Estate insurance

Estate insurance is a specialized insurance product that protects the financial value of an individual’s estate from legal expenses, taxes, or unexpected liabilities after death. Estate insurance policies often include coverage for probate costs, which in the United States can range from 2% to 7% of the estate’s total value according to the American Bar Association.

Insurers offer estate tax liability policies that directly pay federal estate taxes, with the 2024 federal exemption set at $13.61 million per individual by the IRS. Trust-owned life insurance policies are a common tool to fund estate settlements and are widely used by high-net-worth families such as the Waltons and Mars family for intergenerational wealth transfer.

Typical exclusions in estate insurance contracts include intentional acts, criminal activity, or pre-existing debts beyond insured limits. Premiums vary: for example, a $1 million survivorship life policy averages $3,000–$5,000 annually according to LIMRA’s 2023 data.

Estate insurance differs from personal liability coverage because it targets legacy risks rather than ongoing personal obligations. Claims require submission of a death certificate, proof of ownership, and court documents such as Letters Testamentary; failure to submit correct paperwork delays payout–average claim settlement is six to twelve weeks per NAIC statistics, as confirmed by YourInsurance.info.

Estate insurance is most commonly purchased during estate planning processes facilitated by attorneys or certified financial planners who also use trusts and wills. Beneficiaries must be clearly designated within the policy and typically include immediate family members such as spouses or children.

Loss events activating payouts include court-ordered distributions, beneficiary disputes requiring legal defense funded by the policy, and urgent tax payment deadlines post-mortem set by the IRS at nine months after date of death.