Experts in the field recommend that anyone that has dependents buy some kind of life insurance coverage. However, many people don’t realize the importance of discerning a strong policy from one that won’t meet the needs of those they leave behind.
To help out, Medical Profiles, Inc. explains why life insurance is important below so that you can buy a policy that’s right for your needs.
The Basics of a Great Life Insurance Policy
Income Replacement
The single most important reason to buy term life insurance or permanent life insurance would be for the purpose of income replacement and financial security. Are you the sole income earner for your family? If you die unexpectedly, your family may struggle to pay bills.
Term life insurance benefit payments can reduce your dependents’ financial hardship if you aren’t there to take care of them and need to pay for things like:
- Mortgage payments
- Medical bills
- Education costs
- Personal debts
Cash Value
Why buy a whole life insurance policy? One benefit is easy access to the cash value portion.
Your insurance company will invest a portion of the premium payments to accrue interest over time. That means you could take a tax-free loan out against the value of the policy if you or your family ever need access to cash. You may also be able to surrender an entire life insurance policy to receive the cash value as a lump sum payment.
Insurance Policy Options That Might Complicate Things
Estate Planning
Another reason why life insurance is important is for estate planning. Do your assets exceed the inheritance tax threshold? A portion of a life insurance payout can cover the estate taxes for your beneficiaries.
You can also use a will and testament to direct where the benefits of a life insurance policy will go. For example, you can specify that a portion of the death benefit goes into a 529 education account for a child or grandchild.
Accelerated Benefits
End-of-life medical care and planning can be expensive. Many life insurance policies offer additional accelerated benefit riders, which allow policyholders to access a portion for end-of-life costs. The extra benefit takes the stress off of your loved ones for your end-of-life planning.
Other Options To Think About Long Before You Pass Away
Supplemental Retirement
A life insurance policy can also be one of your vehicles for retirement investing. Cash value components of whole life insurance policies accrue interest, and you can access that value to supplement your retirement income. You can use the collateral to take out loans or turn it into an annuity to receive regular payments during your golden years.
Funeral Costs
Do you know what the average funeral costs are? The final expenses will only increase by the time your policies kick in. Funeral costs are a burden not to put on your dependents, so why not use the death benefits from a life insurance policy and give them peace of mind?
Tax Benefits
Life insurance policies offer attractive tax benefits. For example, any lump sum death benefit the policy pays to beneficiaries is tax-free. Additionally, policies with a cash value component may let the holder take out tax-free loans up to a specific amount.
Peace of Mind
Lastly, a life insurance policy can give you peace of mind. It protects your loved ones if you pass away. So, while planning for a future without you can seem unbearable, these policies help you to take care of the most important things in your life.
High-quality Medical Exams and Lab Testing At Your Convenience in Houston
Now that you know why life insurance is important, take the next step. Contact Medical Profiles, Inc. online or call (832) 251-3926 to have us come straight to your door!
