If you are starting a family or are trying to take control of your financial future, you may come across the idea of investing in life insurance. Many people do not invest in life insurance because they do not want to pay the monthly insurance premiums, but that can end up being a costly mistake. Here are some of the reasons why investing in a life insurance plan is one of the most important things you can do.
Income For Your Family
Right now your family may be financially stable. You and your spouse may have good-paying jobs which makes it easy to provide for your family, but what would happen if one of you had an accident? It’s very unfortunate when someone loses their life, but the reality is that it happens every day. You need to make sure you can provide for your family, even after you are gone. Life insurance can help protect your family in the event that you pass away by providing them with a lump-sum payment upon your death. It is important to have a high-quality life insurance plan that is suitable for you and for your family so that they will not have to deal with financial insecurity due to an unfortunate circumstance. Dealing with death can be extremely difficult for families and you do not want to make the situation worse by taking away your families a primary source of income. When you are looking for an insurance plan, make sure you get a policy that is right for your situation so that you do not leave your family stranded.
Cash Value to Pay off Debt
Another reason to invest in life insurance is that it builds cash value as you contribute to the policy. The monthly payments you make to an insurance plan are not gone forever, and you can still receive money from the plan before your death. A lot of people are unaware that most term life insurance policies will pay you something called a “return of premiums” once the policy has expired. This is beneficial for you and your family because it acts as a forced savings vehicle and will pay you a lump sum once the policy term has expired. This is a great way to pay off a lot of debt at once and could be used to pay off the rest of your mortgage once you receive it.
One common reason wealthy people invest in life insurance is because, it is a tax-efficient way of transferring wealth upon death. Life insurance payouts are treated differently than inherited assets and often times life insurance payouts are the tax-preferred option of passing on wealth to the next generation, Money that is received from a life insurance payout is generally not taxable and this especially benefits high net worth individuals that would normally be subject to the inheritance tax in most states. With that being said, make sure you consult a CPA that is familiar with life insurance products and estate planning before making any decisions.
Invest Now for Lower Premiums
You should invest in a life insurance policy today because life insurance policies are less expensive when you are younger. If you are still in your 20’s or early 30’s you should think about getting a life insurance policy immediately so that you can pay a lower rate. If you start when you are in your late 40’s or 50’s you will have to pay higher premiums for the same policy.
Helping you Achieve Retirement Goals
Your life insurance policy can also help you achieve your retirement goals sooner. If you have a term life insurance policy, you will be able to receive the cash value upon the expiration of the term. If you are eligible to receive this lump sum payout at the end of the policy’s term, it can be used to help fund your retirement. If you are thinking about retiring in the next few years I would recommend checking when your life insurance term expires as it may allow you to retire a few years earlier than you had planned.
It is important to invest in a high-quality life insurance policy so that your family is protected if you pass away. You do not want to leave your family in a poor financial situation when you die so make sure you invest in life insurance so that it can replace your income upon your death. Also, think about all the other important reasons you should invest in life insurance because the benefits of life insurance definitely outweigh the costs.