One of the top benefits of life insurance is financial. Another is emotional.
Financially, life insurance can provide your loved ones with a monetary safety net so they don’t have to struggle after your death. Some types of life insurance even have financial benefits you can use during your lifetime.
Emotionally, life insurance gives you one less thing to worry about. You can sleep better at night knowing that your family will be able to pay the bills if you pass away. 카지노사이트
Here are ways life insurance provides valuable benefits.
Financial Benefits of Life Insurance
The death benefit from a life insurance policy can help your family pay for your final expenses—things like transportation, embalming, a casket, cremation, burial and a funeral service.
The national median cost for a funeral, viewing and burial is around $8,000. Your expenses might be less or much more. A direct cremation can cost less than $1,000, while a full-service funeral in some areas costs more than $10,000.
For most people, covering final expenses is not the main reason to purchase life insurance. A far more significant benefit is the enduring financial security a larger life insurance policy can provide for your loved ones. 안전한카지노사이트
Life insurance can replace years, even decades, of lost income. It can help your survivors maintain their living standards in your absence. That includes paying the mortgage, the car loan and any medical bills from your end-of-life care.
Life insurance death benefits are paid tax-free. Your beneficiaries can use the money however they want.
Benefits of Term Life Insurance
Term life insurance lets you lock in a level rate for a set number of years. After the term is up, the policy expires unless you renew (at a new, higher rate).
A term life policy’s locked-in rate can last from five to 40 years. Common term lengths are 10, 20 or 30 years. You’ll pay regular premiums to keep your policy in force, such as monthly or annually. When you purchase a term life insurance policy, you can count on your premiums staying the same year after year during the level term period.
If you pass away while the policy is in force, your beneficiaries will get your life insurance death benefit. Your beneficiaries don’t receive anything if you die after the policy expires.
Term life insurance is meant to protect against a shorter-term risk than permanent life insurance—like the risk of dying during your working years if your household counts on your income.
Term life insurance is easy to understand, and you’ll pay far less for a term life policy than a permanent policy with the same death benefit amount. It tends to be much more affordable than people assume, even if you have health conditions. 카지노사이트 추천
Benefits of Whole Life Insurance
Whole life insurance is a type of permanent life insurance that’s designed to last a lifetime, no matter when you die.
Whole life insurance also accumulates cash value. The policy’s cash value is guaranteed to grow over time regardless of how investments like stocks and bonds perform. Also, you don’t pay tax on the cash value growth.
A portion of your premium payments goes toward building your cash value. Once the cash value is large enough, you can use it to pay your premiums or take out a policy loan (with interest). If you decide to surrender a whole life insurance policy, its cash value means you might get some money back.
Some whole life insurance policies, called participating policies, also pay dividends. “Participating” means that you participate in a company’s profits as a policyholder. You’ll find participating policies through mutual insurance companies, which are owned by policyholders and not by shareholders.
Dividends on participating policies are not guaranteed, but many insurers have a long history of paying them consistently. You can typically use dividends to pay your premiums, increase your death benefit or add to your cash value.
However, the insurance company generally keeps your policy’s cash value when you die. Your beneficiaries only get the death benefit. And if you have any policy loans outstanding or have made withdrawals from cash value, those get subtracted from the death benefit.
Benefits of Universal Life Insurance
Universal life insurance is another form of permanent life insurance. It also offers a guaranteed death benefit but differs from whole life insurance in that universal life policies can offer the flexibility to adjust your premium payments and death benefits.
Universal life insurance also grows cash value, which you can access through a withdrawal or loan during your lifetime. The rate of growth depends on which type of universal life you buy.
Guaranteed universal life insurance: This is the most affordable type of universal life insurance. It offers a guaranteed death benefit and premiums that will not change but typically has little cash value.
Indexed universal life insurance: This has cash value growth that is tied to a stock market index, such as the S&P 500, or a combination of indexes. You may be able to adjust your premiums and death benefit with this type of policy.
Variable universal life insurance: You’ll select sub-accounts and your cash value gains will depend on investment performance. This generally means you’ll need to actively manage your policy, but you also might have a fixed interest rate option for cash value. With variable universal life, you can also vary your death benefit and premiums, within limits.
The biggest difference between universal life insurance and whole life insurance is the cost. Whole life insurance is more expensive because policies offer a guaranteed rate of return on your cash value. By contrast, term life insurance is the cheapest type of insurance because it offers level premiums only for a defined time period and has no cash value component.
Comparing the Benefits of Term Life, Whole Life and Universal Life Insurance
Benefits of Life Insurance Riders
If a standard life insurance policy doesn’t provide as much risk protection as you’d like, look into life insurance riders. They allow you to increase your coverage or add flexibility to your policy. Not all riders are worth the extra money based on your chances of using them, so think carefully before buying riders.
Here are some examples of riders you may be able to buy, depending on what the insurer offers and whether you’re eligible:
Waiver of premium. This allows you to stop paying for your policy without losing coverage if you become disabled from an illness or injury.
Additional purchase benefit. This lets you increase your coverage at certain points in the future without having to qualify medically.
Living Benefits of Life Insurance
Certain types of life insurance riders fall into the category of living benefits. They let you tap into a portion of your own death benefit during your lifetime under circumstances like these:
Long-term care rider. This helps if you can no longer perform daily activities, like bathing, eating and toileting. When you need in-home care or assisted living, it can be pricey. This rider can provide funds for the extra expenses.
Terminal illness. An accelerated death benefit rider helps if you are diagnosed with a terminal illness and given a short time to live. (The rider will specify the length for eligibility.) You can spend your death benefit on palliative care or other expenses.
Critical illness. This can be a big help if you are diagnosed with an illness that may shorten your life, like kidney failure, heart valve replacement or cancer.
Living benefits may be included with your policy or may cost extra. They add flexibility but using them typically reduces what your beneficiaries will receive when you die. It may reduce the benefit dollar-for-dollar, or it could reduce it by more.
Tax Benefits of Life Insurance
A life insurance policy’s death benefit is generally not taxable. There are exceptions, however.
Here are examples of taxable situations:
You withdraw cash value from your policy that includes investment gains.
You surrender your life insurance policy. You can be taxed on the portion of the money that came from investment gains.
The life insurance policy was transferred to you for cash.
Your beneficiary receives the death benefit in installments and interest accumulates as the insurer holds the policy in an interest-bearing account. They will need to pay taxes on the interest.