Most people think of life insurance as primarily beneficial as a form of income replacement. But aside from providing your children, aging parents, spouse, or other family members financial support if you were to pass away, life insurance can be used for the following purposes:
- Estate planning—Even if you don’t have many assets to pass on to your children or other heirs, a life insurance policy can play a key role in your estate and serve as an inheritance to your named beneficiaries. You can also choose to have part of your estate donated to a charitable organization. Whatever you choose, life insurance can provide financial flexibility in terms of how you want your estate distributed.
- Paying off debts—Life insurance may also be used to help your loved ones pay off large financial commitments, such as a mortgage or college tuition. It is also important to consider funeral and burial costs as well as other final expenses, which can quickly add up. According to goodfinancialcents.com, the average funeral can cost between $10,000 and $15,000. Life insurance can help your family so that they do not have an extra financial burden coupled with a loved one’s passing.
- Wealth accumulation—Some kinds of life insurance can have a cash value that can be withdrawn, if the owner so desires. In this sense, buying a cash-value policy can create a vehicle for savings. It’s also important to note that the interest credited is tax deferred—another benefit to using life insurance as a method to save.
No matter the primary reason you are considering life insurance, it will always be cheaper to buy a policy while you are young. Even just a few years could make a difference on the price of your rates and solidify your family’s financial future as soon as possible. Speak with an advisor to get started, or check out this previous blog post to get an overview of how to apply.
