For many generations, life insurance has been viewed as mostly a way to cover funeral expenses or replace income from the family breadwinner in the event of his or her death. Without a doubt, those are still two of the primary goals of a life insurance policy. But you might not know that these days, many people are utilizing life insurance to accomplish other important financial planning goals.
Hedge against debts. “Replacing income” is one way to look at life insurance. But you might also consider purchasing a policy that will cover your outstanding debts, such as a mortgage. This way, your loved ones aren’t left struggling to pay the bills on a lower income after your passing.
Protect against estate taxes. If you own considerable assets, your heirs could be charged a hefty estate tax penalty. A life insurance policy in the amount of expected taxes can cover that liability for them, making it much easier to process your estate.
Leave a legacy. If you want to leave a specific monetary gift to a charitable organization, purchasing a life insurance policy can accomplish that goal. Simply name the organization as the beneficiary on the policy.
Prepare for retirement. Some types of life insurance can actually be utilized to provide a stream of income in retirement.
Equalize bequeathed assets. Let’s say you want to leave a certain valuable piece of property to one child, but you don’t want to play favorites. You can purchase a life insurance policy, so that you bequeath something of equal value to your other child.
Build net worth. A life insurance policy adds to your net worth. This can be a valuable asset in the event that you need to borrow against it.
If you have a particular estate or financial planning goal, it is likely that there is an insurance policy to help you achieve that objective. But because there are so many life insurance policies on the market, it’s best to seek expert guidance before selecting one. Call us to schedule an appointment, and we can help you review the options.
