Most people know that the point of life insurance is to provide a lump sum of money to dependents upon your passing. This money can be used to cover funeral and burial expenses, pay off the mortgage on the family home, keep the family financially secure, or even pay for important expenses like college tuition. Whatever you hoped to provide for your family during your lifespan, you can cover with a life insurance policy, just in case the worst happens.
But life insurance can also provide a few other, very important benefits, such as….
The payout is tax free. Your beneficiaries won’t owe income taxes on the benefits from your policy, helping to protect them against an additional burden at a difficult time. In many cases the benefits will be free of estate taxes as well.
Life insurance payouts are usually fast. In most cases, your beneficiaries will receive a cash payout very quickly after your death. This money will keep them afloat during a difficult situation in which your income has been suddenly lost. Other assets that you leave them, such as real estate, would have to be sold before they could access the full value.
Your policy might build cash value. If you select a policy that builds cash value, you can withdraw money or take out a loan against the policy in the event of an emergency in the future. These withdrawals or loans are often income tax-free as well.
Living benefits riders might even benefit you. We often think of life insurance as providing benefits to our loved ones after we pass away. But if you select a policy with a living benefits rider, you can actually collect your payout while you’re still alive. Under this provision, you could access your benefits to provide income in the event of a terminal illness.
Life insurance is more flexible than you might think. Let’s say that when you’re young, healthy, and can’t afford a large premium, you sign up for a cheaper term life insurance policy. At the end of that term, have you simply lost money? Not at all! In many cases you can exchange that policy for a permanent life insurance plan that continues to provide your family with the protection they need.
These are just a few of the many reasons you should consider a life insurance policy. Call us for more information, and we can help you understand all the different types of life insurance out there… And help you select a policy that is right for you.