Do you ever worry about what will happen if something happens to you? Not the fear that grips you when you are alone in your home at night, but the stress and anxiety associated with trying to provide for your family, pay off debt, or maintain your lifestyle. This is where investing in life insurance can have various benefits.
What is Life Insurance?
A life insurance policy is a contract between you and the insurer, where you pay premiums in exchange for an agreed-upon sum of money should something happen to you. Your beneficiaries would have access to this money immediately after passing away so they can make the necessary arrangements for your funeral, pay off any outstanding debts you left behind, and hire a financial planner to help them plan out their future.
Reasons to Invest in Life Insurance
It Provides Finances For Your Loved Ones If You Pass Away
First, it is important to understand that life insurance can benefit your family in the event of a loss. Life insurance will help pay off any bills and debts still owed by yourself or your family members. Life Insurance policies are highly customizable, so they can have niche benefits depending on what you need.
Policies are Affordable
Life insurance policies are cheaper than you think. In fact, many do not even require a medical exam or health questionnaire when applying for them, which makes getting started much easier. You can also take advantage of several discounts to lower your premiums.
It is an Investment
Life Insurance is not just about protecting your family. It is also an investment. When you purchase a permanent life insurance policy with cash value, the money that accumulates in this account can be used for many things, including:
- Tax-Free Growth – The money accumulated in a life insurance policy does not have to be reported as taxable income. This means you can invest more and grow your money faster. Compounding interest is on your side instead of the government's.
- Retirement Security – When you purchase a permanent life insurance policy with cash value, the dividends that accumulate in your policy can be used to invest in real estate, stocks, and bonds. This means you could buy a vacation home or diversify into new investments without having to sell off any of your existing ones.
- Estate Planning – When you purchase a permanent life insurance policy with a cash value, you have the option of naming a beneficiary to receive your policy's cash value as well as the death benefit. In some cases, this could mean an additional source of income for those who rely on social security or pension.
- Inflation Protection – We all know that prices rise over time. While this is a good thing for those who own their homes, our purchasing power decreases as we get older. With a permanent life insurance policy with cash value, the money that accumulates in your account will rise along with inflation. This means you can continue to protect your family's future without having to worry about losing purchasing power.
Why Hire an Insurance and Financial Professional
Hiring a professional, especially a member of the National Association of Insurance and Financial Advisors (NAIFA), can make your experience a lot easier. They will help you determine how much life insurance to purchase based on your current income and family situation. The professional could also find an insurer who has the best rates to get the most value out of your policy despite having a pre-existing health condition or other factors that might make finding coverage difficult.