One important benefit of having life insurance is that it ensures your family is financially secure if something untoward happens to you. That way, they will be able to cater to their needs and wants even when you are not there. Life insurance can:
- Help settle your mortgage payment
- Pay for your children’s college education
- Serve as income replacement if you lose your job
- Meet certain financial obligations, such as caring for aging relations
- Cover many debts, such as credit cards, car loans, and student loans
It is important to note that the benefits you stand to enjoy by purchasing life insurance depend on the coverage you choose. Also, the type of policy you buy influences your benefits. Life insurance can be combined with other insurance types, such as disability insurance. Specific policies have a cash value that increases with time. These cash values can be used to pay for premiums at a later time. They can also help you live a better life post-retirement.
Life insurance also has tax benefits. For instance, death benefit payouts are usually tax-free. Moreover, certain policies are designed to transfer money to your heirs with limited tax liabilities.
Types of Life Insurance and Their Benefits
There are two basic types of life insurance – term life insurance and permanent (whole life) insurance.
Term Life Insurance
With term life insurance, you have to pay a certain amount in premium for a specified period, e.g., ten years. If you pass away within this period, your beneficiaries will receive the death benefit. However, if you don’t die, you will have to get new coverage or risk losing your current coverage.
Some benefits of term life insurance include:
- It has a low cost
- It is easy to understand
- Most term life policies can be converted to whole life insurance
- If you can no longer afford it, you can stop paying your premium. However, you will lose the premiums you’ve already paid.
Permanent Life Insurance
The permanent life insurance policy, on the other hand, is designed to last your entire life.
Its benefits include:
- Provision of estate planning benefits with tax advantages
- It features cash value, an essential savings element that you can borrow against
Ways You Can Get More Benefits with Life Insurance
There are several ways you can maximize your benefits with life insurance, such as:
- Purchase life insurance when you are younger and healthier
- Get life insurance at group rates through your employer
- Buy permanent life insurance to accumulate cash value, thereby reducing your monthly premiums
- Obtain policies with riders that can add benefits for an extra amount—for instance, disability waiver of premium and accelerated death benefit.
Bear in mind that the type of life insurance you purchase depends on your needs. As such, endeavor to do adequate research about life insurance before buying one. Also, the earlier you get a life insurance policy, the better it is for you.
For all your personal insurance needs, contact us at Young Insurance today!