You know that the point of life insurance is to provide needed income to your beneficiaries in the event of your death. This can protect them from the burden of final expenses, medical bills, lost income, and more. But most people don’t know all of the ins and outs of life insurance contracts, because they can be complex. Here are just a few facts that might pleasantly surprise you…
Payout of death benefits is tax-free. Your beneficiaries will not owe income tax on a life insurance payout, so they don’t have to worry about an unpleasant surprise when they file their taxes the following spring.
The payout is almost always fast. In the event of your passing, many assets that you leave to heirs must be processed through probate court, or even sold before their value can be accessed (such as real estate). This could place undue burden on your family at an already difficult time. Luckily, life insurance payouts are almost always quick and convenient, offering a financial boost when funeral costs and other final expenses often strain budgets.
You can build cash value, that can be accessed during your lifetime. If you choose a contract that allows it, you can withdraw cash or take out a loan against the value of your life insurance policy. This allows you to access part of the payout, often free of taxes, if you face emergency expenses during your lifetime.
Some life insurance policies offer a payout before your death. In the event of a terminal illness, you might need to access part or all of your life insurance payout toward the end of your life. If you previously selected a living benefits rider on your contract, this will be possible.
Life insurance can be flexible. Those with young families to protect will often choose a term life insurance policy, which offers protection for a limited period of time in exchange for relatively low premiums. But when your term is up, you can often convert that policy to a permanent life insurance plan, and save some money while doing so. Just make sure you ask about this option before the contract expires.
If there’s a need, we can probably locate a life insurance policy to address it. Just give us a call and we’ll be happy to help you analyze your situation, and make recommendations for life insurance policies that suit your family’s budget and priorities.