Hey, have you thought about life insurance? I know it’s a bummer to think about, but it’s something that everyone should consider. No one knows when their time will come, and if something happens and you don’t have life insurance, your loved ones will be left dealing with the aftermath.
Even though it’s not a fun topic to think about, you should seriously consider getting life insurance. Using this money can cover many expenses, including funerals, living expenses, college tuition, mortgages, and even everyday expenses. The policyholder also gets maturity/survival benefits if they live to the end of the term.
In addition, you can add riders to your life insurance coverage to protect your finances in specific scenarios, such as if you become disabled and cannot work. Even so, life insurance has other uses, and a potential buyer needs to know what benefits they can expect.
How Does Life Insurance Work?
Simply put, life insurance is a policy that provides financial protection in the event of your death. If something happens to you and you have a life insurance policy, the money from the policy will go to your beneficiaries (usually your spouse or children). It can help ensure that your loved ones are taken care of financially after you’re gone.
Besides death benefits, life insurance offers cash value accumulation and living benefits. Cash value accumulation is a savings account that grows tax-deferred. This money can be accessed through policy loans or withdrawals and can be used to supplement retirement income or pay for major life expenses.
On the other hand, living benefits are payouts you can access while you’re still alive if you experience a qualifying event such as a terminal illness or chronic illness. These benefits can help cover medical expenses or make ends meet if you cannot work.
But life insurance has many other benefits, which is why it’s a valuable investment. Here are just a few of the top advantages of life insurance:
1- Life Insurance Payout is Tax-Free
When you pass away, your life insurance policy pays out a death benefit to your beneficiaries. Fortunately, this money is tax-free.
Your beneficiaries won’t have to pay taxes on the death benefit they receive from your life insurance policy. It is true even if the death benefit is more significant than the premiums you paid into the policy.
And, since the payouts are tax-free, your beneficiaries will be able to keep more of the money they receive.
2- Pay Off Your Debts and Other Final Expenses
One of the main reasons people take out life insurance is to ensure that their loved ones are taken care of financially during their death. However, did you know that you can use life insurance to pay off your debts and other final expenses?
If you have a life insurance policy with a death benefit that is large enough to cover your debts and final expenses, your loved ones can use the money from the policy to pay off those debts and expenses. It can be a huge financial burden lifted off their shoulders, giving them one less thing to worry about during an already difficult time.
Your folks need to know your life insurance policies and how to claim if you pass away. These policies are relatively inexpensive and have low coverage amounts.
3- Protect Your Estate From Creditors
Your estate may be subject to creditors’ claims when you pass away. However, you may not know that life insurance may also protect your estate from creditors in the event of your death.
Here’s how it works: if you pass away with outstanding debts, your creditors can come after your estate to try and recoup what you owe them. If you have life insurance, the death benefit can help pay off any outstanding debts, preventing your loved ones from shouldering the burden.
4- Rider’s Life Insurance Advantages
A life insurance rider is an additional feature that can add to a life insurance policy. Riders can provide benefits such as waiving the policy’s premiums in the event of disability or providing a death benefit to a named beneficiary during the policyholder’s death.
Riders can be highly beneficial, providing peace of mind and financial security to policyholders and their loved ones. Here are just a few examples of the benefits that life insurance riders can provide:
Waiving of premiums in the event of disability: If the policyholder becomes disabled and cannot work, most life insurance policies will waive the policy’s premiums. It can provide much-needed financial relief during a difficult time.
Death benefit to a named beneficiary: In the event of the policyholder’s death, a life insurance policy with a rider can provide a death benefit to a designated beneficiary. It can help to ease the financial burden of losing a loved one.
Living benefits: Some life insurance policies with riders can provide living benefits to the policyholder. If the policyholder suffers from a terminal illness or becomes severely disabled, this can include a cash payout or a percentage of the death benefit.
Rider for term conversion: By adding this rider, you can convert your term policy into a permanent one.
Death benefit rider: You can receive part or all of your death benefit even if you’ve been diagnosed with a terminal illness.
Using long-term care riders: If you require long-term care, you can use this rider to pay for those expenses.
5- Retirement Savings Tool
One of the many benefits of life insurance is that it can also be used as a retirement savings tool. Investing in a life insurance policy can help ensure you have enough money for retirement.
You can use life insurance as a retirement savings tool in several ways. One way is to purchase a policy with a cash value component. This policy allows you to build up cash value over time, which you can use for retirement expenses.
Another way to use life insurance for retirement savings is to purchase a policy that provides income benefits. This policy will provide you with payments if you become disabled or cannot work due to an illness or injury. These payments can help you cover your living expenses during retirement.
Of course, there are downsides to using life insurance as a retirement savings vehicle. Your beneficiaries will receive less money if you die while your policy is still in force. And if you borrow against your policy, you’ll have to pay interest on the loan.
6- Disability Life Insurance Can Be Helpful
If you’re disabled, life insurance can help provide for your needs. It can ensure that you and your family are financially secure.
There are several things to consider when shopping for life insurance if you’re disabled. First, you’ll want to make sure that the policy covers you for your disability. Some policies exclude coverage for specific disabilities, so read the fine print carefully.
Second, you’ll want to consider the type of policy best for you. Term life insurance is typically the most affordable option but only provides coverage for a set period. On the other hand, whole life insurance policies provide lifelong coverage but can be more expensive.
Finally, you’ll want to ensure you get the best rate on your life insurance policy. Rates can vary widely depending on age, health, and smoking status. Be sure to compare rates from multiple insurers to get the best deal.
7- Life Insurance Provides Peace of Mind
For most people, life insurance is something they never consider until they need it. But having a life insurance policy can provide peace of mind in knowing that you and your loved ones are taken care of financially if something happens to you.
Many different life insurance policies are available, so it’s essential to work with an experienced agent to find the right one for you. But in general, life insurance is intended to cover expenses such as funeral expenses, outstanding debts, and even daily living costs in the event of death.
It is a good idea to purchase life insurance to provide your family with financial security. Get in touch with a life insurance agent now.
The Bottom Line
You know the drill: life gets busy, and before you know it, another year has flown by. Have you taken a moment to think about your life insurance coverage lately? If not, now is a good time to do so. Life insurance is a crucial safety net for your loved ones, regardless of income level.
A life insurance policy that meets your needs and that you’re comfortable with is necessary. After all, life insurance is one of the most important ways to protect your loved ones in the event of death.
Don’t wait until it’s too late. Review your life insurance coverage today and ensure you’re still on track. If not, it’s time to make some changes. It is advisable to look around and compare different life insurance policies if you intend to purchase life insurance.
