Life Insurance has many variations meant to meet the coverage and budget requirements of almost anyone; however the basic purpose is the same: It is the single best way to protect loved ones against the financial devastation caused by the untimely death of an income-earning member of your family. When a death occurs to a family’s primary or even secondary breadwinner, in the absence of life insurance, the financial future of the family members left behind can be devastating.
Life insurance can:
- Pay off the mortgage or other debt. Having a life insurance policy to help pay off the mortgage can save a family from having to move into more modest housing. Bankruptcy or debt forgiveness is not an option with private student loan debt.
- Pay for a child’s educational needs. Often, in the absence of life insurance, the cost of college is beyond reach.
- Pay for burial expenses. Funeral costs on average run about $15,000. Are you prepared?
- Be used as a safe, long term investment vehicle or as a tax-favored repository of existing funds. Life insurance as an investment vehicle can be set up with little to no risk to your principle investment.
- Avoid Probate. After you die, the vast majority of your assets enter probate. The court then decides who gets the money and sorting this out takes time. Death benefit funds by-pass probate and are paid, tax free, directly to your chosen beneficiary.
Additional Benefits of Life Insurance:
- Death benefits are disbursed as tax-free income directly to the beneficiary, which avoids probate (I mention this twice because it’s a big deal!).
- The interest on cash value grows tax-deferred during the policy term. Often, there is no tax penalty for loans or withdrawals against the equity in the life policy, up to the premiums paid.
- Life Insurance policies may be exchanged for another life insurance policy or annuity without triggering a tax penalty.
Life insurance is purchased, not for ourselves, but rather for the loved ones we’ve promised to protect.
Is your family protected? Will they thrive or struggle? Call your agent today for a life insurance quote.
Author – Tom Cloherty
Tom is a licensed agent with Doyle & Ogden Insurance Advisors with over 10 years of insurance experience.