What you don’t know about life insurance may financially hurt you and your family. Life insurance is often seen as a safety net by paying a death benefit upon someone’s passing. While that is an important benefit, the potential benefits extend far beyond what most people are aware of.
1. Mortgage protection: Funding life insurance to pay off the mortgage in case of early death. This is essential if the family relies on your paycheck to pay the mortgage payment. But with a Return of Premium (ROP) life insurance policy, even if you are still alive, at certain anniversary dates, if you elect to, you can cancel the policy and have ALL of your premiums refunded. This strategy can be used to pay off the mortgage 10 years earlier than scheduled. It’s a win/win. If you die, your family will have the death benefit, and if you don’t die, you can cancel the policy and get your money back.
2. Care for special needs child(ren): Parent(s) of special needs child(ren) have the additional worry of providing lifelong support. Life insurance can fund a special needs trust, insuring your child(ren)’s needs are taken care of even after you are gone. Brightside Financial also provides Estate Planning services to help you create a trust and appoint Guardianship.
3. Tax Free Retirement Savings: The cash value inside a life insurance policy grows tax free. Once there is cash value built up in the life insurance account it can be accessed in the form of loans. Unlike Roth accounts which have a cap on how much the IRS will allow a person to contribute and on how much a person can earn to qualify for contributing to a Roth, life insurance allows much higher contributions since there is a cost of insurance associated with the life insurance policy. To comply, these accounts are structured with the minimum amount of death benefit the IRS will allow to be considered in compliance with the goal of “max funding” the account to grow the cash value as quickly as possible.
4. Final Expense: Funeral and burial costs can be a burden on grieving families. Life insurance can cover these final expenses, ensuring the family is not left with this financial burden. Did you know that most “Go Fund Me” campaigns don’t receive adequate funds? Life insurance is an inexpensive way to cover these costs and have peace of mind knowing your family will not have to rely on strangers while they are grieving.
5. Debt: It is very easy to accumulate debt such as credit cards, student loans, auto loans, etc. Life insurance can be used to pay off debts to alleviate the family of this burden.
6. Business Continuity: Business owners should be concerned about what would happen to their business if something happened to them. Having a business continuity plan is essential and life insurance can help fund it. Life insurance can fund a buy-sell agreement or provide capital to keep the business running smoothing during a transitional period.
7. Family Care: Insuring a stay-at-home parent is a vital aspect of comprehensive life insurance planning. While the financial contributions of a stay-at-home parent may not be as tangible as those of a primary breadwinner, their role is invaluable to the family’s well-being and quality of life. What would it cost to hire quality help to clean the house, plan and cook meals, transportation for the children, childcare, etc.? By securing adequate life insurance coverage for a stay-at-home parent, families can ensure their financial needs are met and attain a stability during challenging times.
8. Long Term Care/Living Benefits: Some life insurance policies offer an extra layer of protection by providing additional benefits known as “living benefits”. In general, if the insured encounters an illness or injury that is expected to shorten the length or quality of life, a claim can be made to the life insurance company to claim a portion of the death benefit while the person is alive. Depending on the policy provisions, the insured may qualify to receive a lump sum or a monthly amount. Life insurance carriers that offer these types of policies generally pay 7 living benefits claims to every 1 death benefit indicating the strong need for this type of coverage.
9. Education: Families with children may want to consider funding life insurance to cover educational expenses for their child(ren). With rising education costs, life insurance is an inexpensive way to create a large sum of money to pay for college in the event of the death of the insured.
10. Million Dollar Baby: Similar to #3, a cash value life insurance policy for your child or grandchild is another way to fund a child’s education. Max funding a cash value life insurance policy on your child not only creates a tax-free bucket of money that can be used for their education, but can be used for anything including their wedding, down payment on a house, start a business, etc. This not only locks in their insurability while they are young and healthy, but premiums are relatively low due to their age. The funds compound for years in these accounts providing availability to tax free funds for generations.
11: Charitable Giving: Some people want to leave a legacy such as a building or a large sum of money to a charity or organization of their choice. For pennies on the dollar, life insurance is a great way to leave a legacy that will last many years.
In conclusion, these are just a few examples of the many applications where life insurance can help. Contact Brightside Financial today to discuss your financial goals and needs with a licensed professional. If you are ready to explore life insurance options that are tailored to your specific needs and concerns, contact us today. We are independent which means we have access to most insurance providers to find the best fit for your specific needs. Let us do the heavy lifting for you and find the best fit that align with your goals.
