Life insurance is also a great way to leave an inheritance to your children. There is no better singular way to transfer tax-free wealth. Your IRA (except Roth), 401(k), or other retirement plan will be taxable to your beneficiaries when the money is distributed or withdrawn from the account. So, taking out the most life insurance is a no-brainer.
When I am preparing estate plans for clients with children – I always advise them to get as much life insurance coverage as they are eligible for – the absolute maximum while they are still young. Life insurance premiums become very expensive with increased age, so get it while the going is good. There is no easier way to transfer wealth (tax-free) to the next generation.
Also remember that the beneficiary for your life insurance policy cannot be a minor – i.e., under the age of 18 year old in Texas. If your beneficiary is not yet 18 years old, you will need to name a trusted adult or a trust for the benefit of that minor child as the beneficiary of your life insurance policy.