Being proactive in your life by considering a life insurance policy is a responsible choice.
You’re not only providing financial security for your family but making your retirement years less stressful.
However, life insurance can be confusing—which policy is best for you? Your family?
Read on to learn the different types of life insurance policies you can have, as well as the many life insurance benefits that come with them.
Types of Life Insurance
In general, there are two categories of life insurance: short term and long term. (Read on to find out what the difference is between the two!)
The Short Term
Term life insurance is the short term.
This is a great option for new parents wanting to make sure their child (or children) is/are financially provided for should the unthinkable happen.
Normally, parents take out a ten, fifteen, or twenty-year policy. After which you can convert, replace, renew, or sell your policy.
The Long Term
Long term wise, we’re talking about permanent life insurance. Although they’re generally more expensive in the short term than term life insurance, they decrease in the later years.
And, as the name suggests, there is no expiration date.
Although they’re generally more expensive in the short term than term life insurance, they decrease in the later years.
This is a good option for those who don’t want to leave their spouse with the remaining debt.
Or for wealthy individuals who want to pay off estate taxes and pass the benefits to their beneficiaries.
Remember, it’s important that the life insurance is transferred to the beneficiary/beneficiaries in order for them to receive the benefits.
Now that you know the types of life insurance, here are the benefits of getting a policy.
Life Insurance Benefits
1. Financial Security
According to CNBC, 65.4% of households 55 or older that have some level of debt increased a little over 50% (53.8%) since 1992.
As we’ve mentioned, a permanent life insurance policy can ensure that your spouse isn’t swamped with debt should you pass.
2. Financial Flexibility
Need to pay for your child’s college education? Did your business take a dip this year?
In the case of financial need, you can take a loan from your permanent life insurance.
Unlike a Roth IRA, safe harbor match, and other 401(k) options, there’s no restriction.
3. To Ensure Your Child’s Needs Are Met
Permanent life insurance is something to consider if you want to ensure your child is taken care of for the rest of his/her life.
This type of care could range from medical care to helping your child pay for a down payment on a house.
In a sense, it’s your final gift to your children to help them with their futures.
At the end of the day, these life insurance benefits can help your family during financially tough times.
They can also make sure your passing doesn’t place a heavy financial burden on your loved ones.
Any more life insurance benefits? Have a question about life insurance policies? Leave a comment in the comment section!