Reasons to buy life insurance.
Life insurance can give you peace of mind that your loved ones will be taken care of after your death. Some of the most common reasons for buying life insurance include:
- Guaranteed protection
The life insurance policy acts as a financial safety net if you have a family, business, or others who depend on you. When you die, your beneficiaries will receive a lump-sum payment. - Income replacement
Imagine what would happen to your family if the income you provide suddenly disappeared. With life insurance, you can help ensure that your loved ones have the money they need to help pay the mortgage, and health care, cover tuition or other college expenses, eliminate household debt or preserve a family business.
3. Tax-free benefit
Your beneficiaries will be able to enjoy every penny you leave them. That’s because the benefit of a life insurance policy is generally passed along federal income tax-free.
4. Optional riders
Life insurance policies can be tailored to meet your individual needs. You can use riders to purchase additional protection without further underwriting, to pay your premiums if you become disabled, to use some to pay for a chronic illness or to purchase coverage for your children.
5. LIRP
A life insurance retirement plan is a permanent life insurance policy that uses the cash value component to help fund retirement. LIRPs mimic the tax benefits of a Roth IRA, meaning you don’t pay taxes on any withdrawals after you are 59½ years old and cash gains are tax-deferred. Any permanent life insurance policy with a cash value, such as Indexed Universal Life insurance, can help fund retirement. Term life insurance does not have a cash value and cannot be used for a life insurance retirement plan.
Life insurance is a way for you to leave money to people you care about in the event of your death. At its basic level, it’s an agreement between you and a life insurance company. You agree to pay them and, in turn, they provide you with insurance coverage. You can think of it like a subscription service: as long as you pay premiums, you’ll be covered. Maybe you want to make sure your spouse will be able to pay the mortgage, no matter what happens to you. Maybe you want your kids to afford college. Or you might simply want to make sure your people will be OK paying day-to-day bills if you’re not around to provide for them
