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5 Benefits of Life Insurance

Life insurance is an affordable way to provide financial protection for loved ones. It’s considered a staple of a well-rounded financial plan, and securing the right policy could be less expensive than you think. In fact, more than half of Americans believe life insurance is almost three times more expensive than it actually is! So, if you’re on the fence about getting an affordable life insurance policy, here are five benefits of life insurance to consider.

1. Peace of mind

When you pay premiums for your life insurance policy, your insurer guarantees they’ll pay a death benefit to your beneficiaries if you pass away while the policy is active. That means you can rest assured that loved ones will be cared for financially once you’re gone. Having life insurance in place can also give peace of mind to your family, who will have space to grieve if something happens to you without worrying about the financial strain of your absence.

2. Tax-free payouts

The death benefit paid out to beneficiaries is tax-free in most circumstances. That means loved ones don’t have to claim the benefit as taxable income, and they’ll have more money to help cover financial needs if something happens to you. A life insurance payout also doesn’t go through probate, which is the sometimes lengthy process of distributing your estate’s assets following your death. As long as you keep your beneficiary list up-to-date, the tax-free benefit can quickly get to loved ones who need it most.

3. Financial protection

Perhaps the most significant benefit of life insurance is that loved ones can use the money however they see fit. There are no stipulations on how your beneficiaries can spend life insurance proceeds. This gives your family freedom to use the payout to pay off lingering debt, replace income, or pay for a child’s education. The choice is entirely up to them!

4. Living benefits

Life insurance guarantees a death benefit payment to loved ones if you pass away while the policy is in force. However, life insurance policies also offer benefits you can use during your lifetime.

Whole life insurance policies can accrue cash value, which you can then withdraw, take a loan against, use to pay policy premiums, or increase your death benefit. Life insurance policies also offer living benefits in the form of life insurance riders, including terminal illness, accelerated death benefit (ADB), and inflation protection, among others.

Life insurance riders may increase your premium payments, but they can be worth the price. For example, suppose you have a family history of cancer, Alzheimer’s, or serious illness. In that case, it may make sense to prepare for the future by purchasing a terminal illness or accelerated death benefit (ADB) rider. If you end up needing to use the rider, you can use the money to pay for end-of-life care, put your affairs in order, or even take a memorable trip with loved ones. Ultimately, having these living benefits can give you peace of mind, whether you use the coverage or not.

5. Flexibility in policy length

If you want lifelong protection, a permanent life insurance policy will provide a death benefit if you pass away at any age as long as premiums are paid. On the other hand, term life insurance generally ranges from 10 to 30 years and often covers specific needs. Depending on your unique financial situation, you can choose the term length that works best.

For example, if you have a young family, you may opt for a longer 30-year term policy to cover expenses until the children are grown and out of college. On the other hand, if you’re almost debt-free except for 10 years left on your mortgage, you may choose a 10-year term policy to cover that debt. Then, if you pass away before paying off the mortgage, your family can continue living in your home without the financial burden of monthly payments.

Do you need life insurance?

If someone relies on you financially, you likely need a life insurance policy. Life insurance can be an affordable way to provide peace of mind to loved ones. And while there are many benefits to life insurance, the policy you choose will ultimately depend on your family’s financial situation. If you want help deciding which life insurance policy is best for your needs, get a quote online or call an agent today.

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