Power of Life Insurance

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September is considered to be Life Insurance Awareness Month. For the professionals that are in the industry, this is the best time to provide insight into the value of having your own life insurance policy. Everyone can benefit from thinking for a moment about whether or not they need life insurance. In the majority of cases, unless someone has a large cash flow in their life from work or assets, there’s a strong chance that life insurance is going to be needed to cover the costs of the funeral and also provide money to the beneficiaries.

If you are someone who has family members who depend on you for income to provide the essentials of life, then it’s important to have life insurance. If you have unsecured debt that needs to be paid off when you die, then life insurance is going to be important. You don’t want to leave the responsibility of these debts to go to your loved ones who are already stressed out with trying to cover the costs of your funeral and other important responsibilities. If you have a lump sum of money that needs to be reserved to pay for your burial and medical expenses, then having life insurance would also be very important under these circumstances. There are many other situations where having life insurance would be helpful as well.

Life insurance is the only financial product that will be able to make and keep the promise to provide an established amount of money in the future, despite how the date is unknown. When someone dies and money is needed to pay for family members or meet other financial obligations, upon the death of the insured individual, the money becomes available as it was promised. There is also no taxes that are applicable to this option. Since 1913 and based on current tax law, there are no income taxes that are due on the death benefit of the life insurance policy when it is paid to a named individual. Therefore, there is no need to worry about how the taxes are going to be paid on the amount of money that has been provided to the beneficiary.

Another good point is that permanent life insurance has living benefits that can be very useful. This would include the available of cash value for loans or withdrawals. Unlike the money that is in a retirement plan, there is no penalty that is associated with withdrawing the money out of cash value prior to the age of 59 and a half. This is unless the life insurance is a Modified Endowment Contract. Advisers who are knowledgeable about the use of life insurance will be able to help you buy a contract that is not classified as a Modified Endowment. Cash value would be able to be used as a form of collateral for a loan from outside lenders. Having a collateral assignment will guarantee to the lender that the amount of debt that exists at the time of death will eventually be repaid to them.