Choosing the right policy to achieve your estate planning goals is important. Life insurance proceeds can be used to pay estate or inheritance taxes, preserving your assets for your heirs. Policies can be purchased on a single life or on two lives. A single life policy insures one person and the face amount is paid at that person's death. A second-to-die or joint life policy insures two people and the face amount is paid at the second death. Some policies may better suit you than others, depending upon your needs and life circumstances.

• Policies for Individuals—A single individual has no other policy choices than a single life policy. The policy's benefit will help pay the taxes due on his or her estate.

• Policies for Married Couples—Multiple options exist for married couples wishing to purchase a life insurance policy. The premium of a second-to-die policy may be less than the premium on two single life policies. However, couples with any concern for retirement or survivor income will purchase a single life contract inside an irrevocable life insurance trust rather than a second-to-die policy. If there is no concern for survivor or retirement income, a second-to-die policy may be appropriate.

• Policies for Non-Citizen Spouse—Either an irrevocable life insurance trust or a qualified domestic trust can be set up for spouses who are not U.S. citizens. With either trust, the non-citizen spouse is the beneficiary. With an irrevocable life insurance trust, the trust owns a policy on the U.S. citizen spouse. If set up properly, the death benefit is not included in the U.S. citizen spouse's gross estate nor is an estate tax due when the non-citizen spouse receives distributions or dies. As an alternative, a qualified domestic trust receives property that is included in the citizen spouse's gross estate and that qualifies for the marital deduction. An estate tax is due when there is any principal distribution to the non-citizen spouse and when the non-citizen spouse dies.

• Policies for Second Marriages—Estate tax can be generated at the first death rather than the second when the individual is married for the second or third time. Spouses may enter into a premarital agreement to keep their assets separate and not part of the property of the marriage. If the estate's value exceeds the exemption equivalent of the estate tax exemption, an estate tax is generated on the first death. A single life policy may be purchased to pay the tax.

• Policies for Marriages with Age Variance—For estate planning purposes, spouses may be treated as single if there is a large age difference between them. It is common, in this situation, to design the estate plan so that some or all of the assets pass to the children upon the parent's death. A single life policy may be purchased to pay the tax generated by this transfer.

• Policies for Deferring Estate Taxes—Most wealthy married couples choose to defer the estate tax until the second spouse's death by transferring the optimal amount of property allowed by the marital deduction. Upon the surviving spouse's death, if the estate is valued below the amount of the exemption equivalent, no tax is due. If the estate's value exceeds the exemption, a tax must be paid and a second-to-die policy could be purchased for this.

• Policies for Non-Deferred Estate Taxes—Some married couples choose not to defer the estate tax until the second death. Instead they generate tax at the first death to capitalize on the graduated rates of the estate tax. This type of plan may be used in community property states where the law automatically equalizes each spouse's estate. The actual benefit of this plan depends on how long the second spouse survives and what happens to the value of the estate between the first and second deaths. With this type of plan, a single life policy is purchased on each individual because it is impossible to determine which spouse will die first. And waiting until later in life could cause the premiums of the policies to increase.