What Can Life Insurance Do For Me?
Most of us have a general sense that life insurance is something a responsible adult should own but how many people know what life insurance can do? In order to buy a policy that will do what you want it to do, means you need to know two things.
- What do you want to do?
- What can life insurance offer?
To help you get started, let’s look at six ways life insurance can benefit you and your family.
Grow Tax Free Income
During earning years, begin growing retirement income by overfunding a permanent live insurance policy. Choose a policy that offers indexed funds to protect your investment from losing ground in bad market conditions. When you reach retirement age, take advantage of interest free loans to draw non-taxable income. When you pass away, the loans are satisfied by the policy value.Build a Child’s Future
Buy permanent life insurance for children of any age to help build their future. Time is an ally. It can turn a low monthly premium into financial support throughout the child’s life. Your investment can help a child go to college, start a business, buy a home, and even fund retirement. Choose a fixed premium policy to lock in a low monthly rate. Look for indexed funds investment options for more stable growth. Ensure the policy includes interest free loans and overfunding options for more choices in how the policy value is used.Provide Security for Family
Have a family counting on your income? Look to term life insurance to protect them. Fortunately, term life insurance is one of the least expensive plans to buy and easier to fit into the family budget. Buy a policy sooner rather than later because the younger and healthier you are the more affordable the policy will be. The goal here is to cover expenses. pay for the mortgage and replace income loss or economic value of work done for the family. The economic loss to the family when a partner or spouse dies can be sizable whether it means losing a bread winner or a stay at home parent.Create a Legacy
A guaranteed universal life policy is usually the most economical way to share the financial successes of your life with children or grandchildren. Life insurance usually pays beneficiaries before other assets in the estate. Having cash in hand while the estate is being processed can ease financial worries during what is typically many months of paperwork. The income is tax free whereas other inheritance may not be and can help the beneficiaries handle estate-related tax burdens. NOTE: For those receiving Required Minimum Distributions (RMDs) consider buying life insurance to transfer the family wealth to the next generation.Reduce Tax Burdens in Retirement
Before those Required Minimum Distributions (RMDs) begin at age 72, consider moving money you aren’t going to need for retirement into a single premium guaranteed universal life plan. Lowering the value of tax deferred accounts lowers RMDs which means less taxable income. The money transferred to life insurance will still be available for emergencies. It will also protect heirs from taxes since death benefits are typically non-taxable.
