Life Insurance: Unsure About It? Ten Reasons To Buy, Now!
Life insurance is the foundation of your legacy and plays an essential role in a person’s financial plan. It offers stability and tax advantages that help to grow, protect, and transfer wealth. As a dynamic product, it can be customized to fit a variety of personal, family, and business needs. For this reason, it is vital to have a trusted advisor who will continually assess your insurance portfolio. To better understand how others use life insurance, the following list provides ten reasons people will buy it this year.
1) Final Expense
The first, and most common use for life insurance, is to pay final expenses. Today, even a basic burial or cremation can cost thousands of dollars. Alternatively, a large funeral can increase these costs tenfold. As final expenses continue to rise, life insurance is one of the most secure options to hedge against this cost.
2) Loan Repayment
Families often use debt as leverage to buy valuable assets, such as a house or automobile. Consequently, many families rely on these assets to support their lifestyle. In the event of a breadwinner’s death, the family can use a policy to pay outstanding debt. Doing so allows the family to maintain the standard of living the breadwinner worked to provide.
3) Legacy – Inheritance
The transfer of wealth, or inheritance, is another reason people will purchase life insurance this year. Although, they may have their final expenses covered, many people use policies to provide an inheritance to their heirs tax free. The owner of the policy can choose which heirs the benefit goes to, and how much each one receives.
4) Charity
What if a person has no family to name as a beneficiary? The philanthropic type choose to leave their death benefit to charities, foundations, or congregations. Naming a charity as a beneficiary provides a tax-free benefit to that organization. In this way, a person contributes to a cause of his or her choice, leaving a legacy of giving.
5) Head Start
Parents, as well as, grandparents often use life insurance to provide a head start for children or grandchildren. Purchasing a policy on a child while he or she is young accomplishes two goals. First, it guarantees the child has coverage throughout his or her lifetime. And, second it locks in an affordable rate for that child who can take over the policy, when ready.
6) Estate Protection
Estate protection is another common use. The right policy offers a liquid asset to pay estate taxes and fees. Oftentimes, families must sell the assets within the estate to overcome the enormous tax burden. Specific life insurance policies protect the estate by providing a lump-sum of cash available immediately to pay expenses.
7) Income Replacement
Families commonly use life insurance to protect against the loss of a breadwinners income. If the dependents rely on his or her income to survive, term insurance offers a solution. It provides dependents the necessary income to maintain their standard of living. In the case of a death, the family receives a monthly check, as if the breadwinner were still providing for them.
8) Education Protection
Today, many parents help their children pay for college expenses. As the price of education continues to rise, it is increasingly harder for students to pay these expenses alone. Insurance is a way to prepare for the possibility that a parent is not alive to help with expenses.
9) Business Continuation
Many businesses will struggle to operate without a specific person. Businesses use life insurance to hedge against the risk of losing an owner or key person. It provides a death benefit to the business after the loss of an owner or key person. Life insurance provides a way to ensure the business continues to operate while replacing that important person.
10) Retirement Planning
Life insurance is a phenomenal tool for retirement planning. Many products accumulate a cash value that grows over the lifetime of the policy. Since people fund their life insurance with after tax dollars, policies offer a tax deferred growth option. Used appropriately, life insurance can provide the owner with an income stream throughout retirement.
SWPAdvice
When it comes to life insurance, planning early is the best thing one can do. It is important to start thinking about it when you are young and healthy. Too often do people wait until something happens to them, or a loved one, before they start planning. Unfortunately, in many cases, this is too late. Therefore, start considering how you can maximize the benefit of your life insurance at an early age. This will help to guarantee you leave the legacy you desire. Finally, get ahead by taking the first step and speak with an advisor today.