The U.S. life insurance industry is worth over $945 billion and figures show that more than half of adults in the United States owned health insurance in 2021. The decision to purchase life insurance will vary from person to person, however, it is commonly thought of as a means of providing financial security for family members upon the death of the policyholder. Knowing any debts or expenses will be taken care of after their passing and that their loved ones will be looked after financially can offer significant peace of mind.
While these benefits still apply, many life insurance policies also have other important benefits, offering coverage in situations you may not be aware of. We will explore some of these benefits further in this article.
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Income Replacement
Your family may rely heavily on your income to pay for various expenses such as mortgage payments, health care, school fees, college tuition, household expenses, and more. Without this income, they would struggle to maintain their standard of living and would be financially unable to meet their needs.
Life insurance can provide income replacement for your lost salary ensuring your family will have the money they need to cover key expenses. You can use this life insurance calculator to figure out how much your family would need if they had to replace your income.
Fund Your Child’s Education
Under a term life insurance plan you will be given protection for a set period of time, for example, 10 or 20 years. If you pass away during this period, the named beneficiaries under your policy will receive a set amount, regardless of the amount you paid in. This means your child will receive the money they need to pay for their education.
Other life insurance plans allow you to choose a period of coverage depending on your stage in life. This could be beneficial if you have young children who are in elementary school. A 20-year term policy would give you peace of mind knowing they will receive payments until their graduation from college.
Help You Buy a House
Cash-value life insurance policies are a type of policy that contains a cash or savings component. Such policies can help you purchase a house by providing the down payment you need as well as covering the closing costs. A 10 or 15-year-old cash-value life insurance policy may have acquired enough cash to allow you to borrow against the policy or, depending on the terms of the policy, to withdraw sufficient funds from it.
Make a Difference
Life insurance policies can also be used to help charitable organizations by naming them as beneficiaries. This will ensure your named charity will receive financial benefits after you pass away, allowing you to continue your philanthropic activities and give to a good cause.
Tax Advantages
Payouts from life insurance policies are generally tax-free allowing your beneficiaries to use the money to cover their expenses without worrying about having to pay taxes.
As this article shows, there are many benefits to taking out a life insurance policy that can help you and your loved ones feel financially secure.
