Any estate, large or small, will have a need for cash to pay taxes, administration expenses, and debts. Estate Planning will ensure that non-liquid assets, such as a cottage or business, do not have to be sold, but can be left to your beneficiaries. There are ways to use the proceeds within a life insurance policy towards estate planning. Insurance products can be used to provide liquidity in an estate to pay off liabilities such as taxes or mortgages. Estate liquidity is also very important to providing living expenses to the surviving spouse and any dependent children.

While term life insurance can be used to fund a short-term estate need such as paying off an outstanding mortgage or protecting the estate against an immediate shortfall, universal or whole life insurance is the favoured option when the insurance is for estate purposes.