Life insurance is something we’re all aware of, but don’t like to think about. Its importance is obvious, but few people fully understand what their insurance policy is capable of. In times of tragedy, you’ll appreciate the investment of life insurance for many reasons.
Term Policies vs. Permanent Policies
Before listing the specific benefits of life insurance, it’s important to distinguish between term and permanent policies. Each has their pros and cons, so be sure to assess your needs honestly when choosing a policy.
Simply put, term insurance policies, as the name states, cover only a contracted term. Essentially renting insurance, term policies cover a specific amount of benefit for a specific timeframe. Typically used by those who are younger, less than 1% of term policies pay a benefit.
On the other side of things, permanent policies are exactly that, permanent. Combining time, tax-deferred savings, and cash accumulation, these policies are designed to self-complete whether you live a full life or pass prematurely. Confident you will receive a benefit no matter what, you may find permanent policies are worth the cost.
So What Are The Five Uses?
1. Cover Short-Term Needs, Such As Debt
Seeing as policy cash is tax-deferred, cash value within your policy can grow continuously. There’s also a lack of tax or penalties upon withdrawal, so the cash value of your policy is relatively accessible, allowing comfort if money gets tight. Or if you simply want to create a Non Taxable nest Egg? This largely applies to permanent policies, but term policies are better than nothing for covering short-term debt.
2. Protect Income That Impacts The Whole Family
No one wants to think about losing the Breadwinner in the home. But loosing the Income that the family relies on is critical. Permanent Insurance is also very useful here because Cash Values can be used later in life to provide income when the working years are over but again Term Insurance can be used here to simply cover the working years specifically.
3. Make Business Relationships Less Personal
One often unheard of plus of life insurance is its ability to protect business relationships through Buy/Sell Agreements and Key Person concepts. These policies protect business interests and specific employees from disaster, respectively.
4. Help Establish Your Estate
If it’s important to you to leave a legacy for your children and continuing generations, then Life Insurance is a perfect tax-advantaged way to fill that need. You can find comfort knowing if something happens to you, your children, grandchildren, or even a charity you are passionate about, will receive financial assistance for years to come.
5. Burial And Funeral Costs
Likely the most well-known use of life insurance, paying for your final expenses provides financial relief from those you leave behind. You never know what the future holds, why wait until it’s too late?
There are plenty of uses for both term and permanent life insurance. If any of these appeal to you, give Adkins Insurance a call at (417) 883-4343. We are more than happy to answer any questions you may have.