Have you ever wondered if life insurance is necessary or what type of life insurance you should have? We have listed several benefits of each to help you determine which would be best suited for you.
Benefits of Life Insurance
With life insurance, you can rest assured that your loved ones will be taken care of. Because no one knows what the future holds, the smartest choice you can make is one that will protect your family. It is always a wise decision to have the security of knowing that your family will be financially stable in the event of a fatal accident or injury.
Accidents are unpredictable, so it makes sense that the one who makes the financial income for your family should have life insurance. If a fatal accident or injury occurs, it can cause a great deal of financial distress and hardship. However, with a life insurance policy, you can avoid the risk of financial burden.
Investment and Savings Opportunity
Certain types of life insurance can also be an advantage because of the investment and savings opportunities, such as whole life insurance. This type of insurance offers a savings account where cash will accumulate with your premiums payments. It is tax-free and is guaranteed by the insurance company.
With a whole life insurance policy, the cash value can be used as collateral. This can be useful for a family who needs to draw on that value for a large investment, such as down payment for a house, car, etc.
Access To Cash
With certain life insurance policies, once your payments have reached the cash value of the policy, it can be accessed through a loan or withdrawal. This is a great way to use the money for necessities such as retirement, emergencies, education, etc.
Advantages of Different Types of Life Insurance
- Death benefits are normally income and tax-free
- The cash value accumulates, tax-free
- A life insurance policy may be exchanged for another
- Death benefits may be estate tax-free
- Policy loans don’t have an income tax
- After cash value is met, it can be withdrawn (for certain policies)
- Many policies’ terms are flexible according to the needs of the policyholder
Term Life Insurance
Term life insurance is perfect for those who need a short-term policy (generally, 10-20 years) and prefer lower payments. This insurance can benefit those who lose income as it will ensure that your financial goals are still met. This can include college funding, paying off a mortgage, etc.
Universal Life Insurance
Universal is a type of permanent life insurance. It is unlike whole life insurance because it allows for more flexibility in changing the amount you pay for the premium. It also provides an opportunity to save money, without it being taxed (similar to whole life insurance). It is generally more costly than term because of its lifetime coverage.
Whole Life Insurance
This type of insurance is very valuable as it provides security for life. Even when your situation changes, such as your health or job, etc., as long as your premiums are paid, you are guaranteed permanent insurance for life.
We hope you have a better understanding of life insurance and the benefits that it has to offer. No matter which type of insurance you decide is best for you, it will provide security and help you achieve your financial goals.