People buy different kinds of insurance for different reasons. They buy homeowners and renters insurance to protect their homes and personal belongings. They buy auto insurance to protect against vehicle accidents. They buy health insurance to help cover the costs of surgery, routine health care and possible medical emergencies that may happen in the future.
Many people buy life insurance. There are different kinds of life insurance that you can buy. The type of life insurance policies that people buy depend on their own individual coverage needs. The two most common types of life insurance are term and whole life insurance.
Term life insurance has premiums that are paid for over a certain period of time. These kinds of policies at the end of the term. They have a death benefit that can be paid out as either a lump sum, in monthly payments or an annuity.
Whole life insurance policies last for the entire life of the policyholder. They also offer a death benefit. These policies may sometimes be more expensive than term life insurance, but they build cash value as premiums continue to be paid. You can even borrow against the cash value of these kinds of policies if you so choose.
There are also other life insurance alternatives, including permanent, universal and variable life insurance policies. There also variations of the kinds of whole and term life insurance policies that you can buy. You can find out more about these policies and other options online. You can visit sites including www.simplelifeinsure.com and others to learn more and weigh the pros and cons of different kinds of policies. You can also check on prices and request a quote from your local insurance agency. Here are a few reasons why you should invest in life insurance.
1. Life Insurance Helps To Cover Final Expenses
In the event of your death, a life insurance policy will help pay for funeral costs, hospital stays, medical bills and other related expenses. People can even pre-plan funeral arrangements and figure out estimated costs if necessary. The death benefit in many policies is usually not subject to federal income taxes. There are also other products such as funeral insurance, burial insurance or pre-needs insurance. While some of these policies can cover a good portion of the overall funeral expenses, in many cases, they are not enough to cover all related costs for a family. That’s where having a good life insurance policy can come into play.
2. It Can Help Pay Off Estate Taxes
Another common use for life insurance policy proceeds is paying off estate taxes. This option is frequently used with permanent life insurance policies for large estates. It can help your loved ones avoid having to dip into retirement savings or having to sell other assets to pay for these taxes. They don’t have to burden themselves with confusing documents or red tape, as such instructions should be provided in the policyholder’s insurance policy, will and other related documents.
3. Proceeds Can Be Used Towards Any Outstanding Debts
Another use of policy proceeds is paying any outstanding debts that may have been incurred during the insured person’s lifetime. Mortgages, car loans, credit card and consumer loan debt, student loans, and other substantial expenses can be paid without survivors having to worry about those obligations.
4. It Can Supplement Income
Life insurance benefits are sometimes used to supplement the deceased person’s income and help pay regular bills. Rent, property taxes, utilities, and other bills are just some of the many responsibilities that can be covered. It can also be used to help fund college educations or retirement savings. There are some life insurance policies that build cash value for college and retirement funds. Several kinds of life insurance allow the policyholder to take out funds or borrow against them to help fund these kinds of saving. Some life insurance policies can be used for expenses such as child care and other regular living expenses incurred by stay at home parents.
5. Proceeds Can Be Used For Business Transactions
Some whole life insurance policies offer annual cash returns that can be borrowed against to help start a business or provide additional operating capital for existing companies. Another common use of life insurance is to buy out a business partner’s interest in a company in the event of their death. Funds that are borrowed from such policies don’t have to be repaid. They just reduce the overall loan balance. Such loans are not used as income tax, except for certain higher income levels that are subject to the estate tax.
6. It Gives Peace Of Mind
Losing a loved one can be devastating for family members and friends. However, good life insurance can help them breathe a little easier by covering necessary expenses. It can give them peace of mind knowing that bills and other financial obligations are covered. They don’t have to fret about taking steps in having to replace primary income in a family.
These are just some of the primary benefits of having life insurance coverage. Some policies can be used to build funds as an inheritance from a family member or can have a charity named as the beneficiary. People also use life insurance proceeds to help pay for their children’s living expenses, to supplement income, paying for long-term care needs and other costs.
Many life insurance policies are very affordable. They are available to almost everyone. There may be some exceptions for pre-existing health conditions, so talk to your insurance agent to discuss your options. You may be able to qualify for a discount if you have existing insurance policies with the same company or agency. Life insurance isn’t pleasant to think about, but it’s comforting to know that our loved ones will be covered when we pass away. It gives them a safety net so that they can cover final expenses and any obligations that may be due. It can help them get on toward living healthy, productive lives for years to come.
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