Life Insurance- Financial Security after Death
Tuesday, March 6, 2018, 6:00 AM | Leave Comment
Term life and whole life are the main life insurance policies. It is always important to familiarize yourself with the policy options that are available.
There are numerous advantages that are linked to both permanent and term life insurance.
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Protection
The main advantage of taking out life insurance is protection. Dying without life insurance can lead to all kinds of emotional and financial problems for the people you leave behind. For instance, your family may be compelled look for money to cover income replacement, funeral expenses, bills, mortgage, debts and more.
Life insurance pays a death benefit that goes directly to your beneficiary and they are at liberty to use it however they want to. They can pay off major debts like students loans, replace lost income or pay off mortgages.
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Peace of Mind
For the duration of term life insurance or whole life insurance for the rest of your life with cash value, you are assured that your family is adequately provided for if you die prematurely. Nothing can substitute the fulfillment you get when you have life insurance and know that your family’s financial obligations will be met in case you die.
You can choose term life insurance that is convertible to permanent coverage and when the policy expires, can be changed to annual renewable term. Permanent life insurance is another option and this last for your entire life.
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Cash Value
Aside from the return the return of a premium policy, there is no cash value with term life insurance. However, a permanent policy means that you qualify for cash value insurance. Depending on how the policy is designed, cash value grows as time goes on. Click here for life insurance in Toronto.
Cash value insurance offers the advantage of making it possible for you to use the money to fund several costs along the way such as living off dividends as income, real estate investments, buying a home and paying off debt.
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Tax Benefits
The death benefit from life insurance is not taxable and the cash value that accumulates is tax deferred. Using policy loans means that you may never be required to pay taxes on the growth of cash value. Policy loans are income tax-free along with a majority of cash value withdrawals as long as the policy premiums paid are not surpassed.
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Flexibility
Life insurance gives you great flexibility in regards to the company you pick, beneficiary, duration, coverage, the policy and more. Even after passing away, much insurance providers allow death benefits to be spent on anything that is required instead of forcing beneficiaries to spend the money in certain ways.
Depending on the policy, after it is enforced and has been in pace for several years, there are different things that can be adjusted, including reducing the premiums. You may be able to lower your premiums as well as the death benefit if your income reduces.
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Affordability
Life insurance rates have become more affordable over the years, especially term life. This is attributed to factors such as people living longer than before. Due to the competitive insurance environment, affordable life insurance is widely available.
