Life Insurance

Most of the financial specialists refer to life insurance as the cornerstone of sound financial planning. Examples of how life insurance is an important tool in financial planning are as follows:

  1.  Life Insurance is a source of savings

Whole life insurance products create a cash value that, if not paid out as a death benefit, can be used for a loan or withdrawn by the owner of the policy. By considering paying  life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of “coercive” savings plan. As a result, the gain credited is tax deferred (tax exempt if the money is paid as a death claim). Many banks ask clients to obtain a life insurance savings amount before they agree to a loan. Whatever  your life insurance policy saves is your money and  banks consider this as an asset.

  2.  Replace Income For Your Dependents

If you have people that depend on your income to survive in the world, life insurance can serve to replace your income for those depending on you if you perish. The most common example of this is parents with young children.  Another example includes couples in which the survivor would be financially crippled by a sudden income loss because of the death of a partner. This would also apply to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Insurance to replace your income can be especially useful if the government- or employer-sponsored benefits of your surviving spouse or domestic partner reduce after your death.

  3.  Make Significant Charitable Contributions

By deciding on a non-profit organization as the beneficiary of your life insurance, you can donate a much larger sum than if you donated cash. If you purchase a single premium universal life policy, depending on the case, it is possible to double your dollar amount.

  4.  Funeral expenses

Life insurance can pay for burial costs, funeral expenses, other estate administration costs, debts and medical expenses not covered by health insurance. You do not want your loved ones to pay for these debts when something happens to you unexpectedly. You do not want to spend your grandchildren’s’ college savings. 

  5.  Guarantee Inheritance For Those Left Behind

Even if you have do not have cash or equity in your home to leave to your heirs, you can create inheritance by buying a simple term life insurance policy. You just need to name your beneficiaries. The cost of a term life insurance policy always depends on the age and health condition of the insured, but it can cost  as little as $10.00 a month.