Some may ask themselves “Do I really need life insurance?” Well, you certainly don’t NEED tax deferred cash growth, tax free withdrawals and income that can last forever. Not to mention if you become disabled, it keeps making contributions to your retirement account as well as paying you a monthly income, and of course a death benefit you and your beneficiaries can use during your lifetime. It would certainly be nice to have something like that though. Even if you don’t need life insurance, it is a great, no risk retirement vehicle.
Any permanent life insurance product other than VUL has a MUCH lower risk tolerance than any security out there (which make up the bulk of 401k, IRAs, and similar investment accounts). So for a person who has most or all of his money in the market, putting some of that money into Permanent life insurance makes for a well-rounded portfolio as far as risk and diversification go. Personal life insurance is a way to hedge risk, avoid taxes, and diversify your retirement portfolio.
But Enough About How Life Insurance Benefits You. Let’s Talk About The People You Love For a Minute
Many people are under the assumption that they don’t really need life insurance for reasons that range from having savings to being too young for it. In this article I go over all of the objections to life insurance and debunk them. If you’re one of those types on the fence about life insurance, the below should answer some of your questions.
Do you have any savings to cover your funeral and bills?
If you were to pass away tomorrow, what would happen to your family? Do you currently have at least $10,000 just to cover your funeral so that your family doesn’t have to go on gofundme to raise money to bury you? Are you covered in the event that the unthinkable happens? This is unthinkable because no one wants to think about their own demise, but responsible people confront these tough life questions so that those they love don’t have to.
Maybe you can push it off to some other time, because hey, what are the chances of dying, right? While you’re waiting, it’s going to get more expensive every year, and there’s always the chance that you become uninsurable if you come down with some illness or take up certain hobbies and professions. Even if you do qualify, at that point your options are very limited and you’ll be paying a much higher rate than most people can afford. What about that mortgage you are currently making payments on? Are you absolutely positive that your family can make those payments, or are they going to end up losing the house?
“I’ve got it through work, so I’ll be alright.”
Or you can lose the job at any moment for any number of reasons. These reasons include corporate downsizing or outsourcing, becoming disabled, or simply finding a better opportunity elsewhere. By the way, you can’t preserve your company life insurance through the COBRA program, as that only covers health insurance. Are you really going to be with the same employer forever? Are you willing to make that bet against your family? Meanwhile, your own insurance policy will never go away for any reason. Not if the company downsizes, not if you get hired elsewhere for a better opportunity, and heck, if you become disabled, you don’t even have to pay your premiums.
“But, it’s too expensive.”
How would you know if you don’t know how much it costs? The cost of life insurance is based on many factors including age, health, and lifestyle choices. No one gets the same rates and you don’t know how much it’ll cost until you ask.
“I’m a stay at home parent, I don’t need life insurance”
And if you were to pass away, who’s going to pay for your funeral? Probably your spouse, and the best, cheapest, and most reliable way for them to do that is with life insurance. Also, if you have kids, consider the fact that you are currently saving your spouse a ton of money on day care expenses, to the tune of a small salary. So it would be wise to calculate how long your children would need to be watched if you passed today, and the dollar amount that would be spent over those years, and make that the face amount of your policy.
“My children don’t need life insurance.”
One of the worst things that could ever possibly happen is if you were to outlive your children. The thought is gut wrenching, but it happens unfortunately. One of the best ways to make sure that you can send your child off right, and even take some time off of work to regain your composure, is to get a life insurance policy on them. Not only will it cover them in the event of the unthinkable, but it can build cash value over time that they can use during their lifetime if and when you decide to hand the policy over to them. That’s one less expense that they would have to think about.
“I’ve got savings that my family can use.”
And what happens if you have an emergency, like the roof needs a repair, or the car breaks down, or washer and dryer need to be replaced? Maybe you’ll have a health issue that eats up those savings. Even if everything goes perfectly smooth and you never have to dip into those savings, if 1 dollar buys 5 dollars of death benefit, wouldn’t it make more sense to put some of your savings toward a life insurance plan anyway? This way your family gets even more money (a lot more) if and when you pass.
Also, consider that if your savings aren’t inside of an irrevocable trust (expensive to set up, could put that money towards life insurance and give more to heirs) creditors have access to those savings, and many people die with high medical bills and other debts like attorney fees to settle their estates. Life insurance proceeds are protected from creditors. Lastly, if you cannot name a beneficiary on your savings (requires a retirement account like a 401k, IRA, etc.) and you don’t have someone else directly linked to the account, it’s likely going to get tied up in probate court for months while creditors pick it’s bones before it goes to heirs. Tons of people end up outliving their retirement savings anyway. So, think about all that before saying you don’t need life insurance.
“I’m Young and Don’t Have a Family.”
Need I remind you that life insurance has a ton of great living benefits that you can benefit from while you’re still alive? Things like a guaranteed rate of tax deferred growth, that only goes up, never down, and keeps contributing to your account if you become disabled, all the while paying you money in disability. Forget about that for a second. Don’t you plan on having kids some day? A spouse perhaps? Always best to get in while you are young, still insurable, and the price is low (Gets very expensive if you wait too long). Even if you never have a family of your own, who’s going to bury you? Someone’s going to have to send you off, and you should have this in place if and when you pass.
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