Life insurance generally has a bad reputation as being confusing but it’s actually a set of innovative products customized for your needs. Life insurance is a crucial component of any financial plan, and it’s simply prudent to explore your life insurance coverage options earlier rather than later.
Protection
First and foremost, life insurance is a protection. It protects your family members and loved ones in the event that something were to happen to you. Of course, considering the worst and thinking about what life might look like if you passed away are things that no one wants to think about, but spending some time researching your options is the only way to ensure that your family is protected in the future. Life insurance helps to protect all of the necessary items that might arise after a loved one passes away. For example, although funeral costs are often thought of by loved ones as a sudden and unexpected expense, there are multiple other ways that a family can face financial troubles in the aftermath of an unfortunate incident.
Income Replacement
If one person is a primary breadwinner in the household, life insurance can serve as a lump sum payment to assist with income replacement. Today’s carriers also have more flexible options depending on your needs, such as the death benefit being paid out over time. This gives you peace of mind and gives your family financial security. Life insurance can be used to help close the gap when the loss of a loved one dramatically affects the financial situation of a family. Income replacement is a vital need for a family grieving the loss of a loved one. The policy can be structured to pay out a death benefit that helps the family regain its composure and land back on their feet. It might also be used by a spouse to go back to school or get additional job training.
Debt and Mortgage Payments
If something were to happen to you today, could your loved ones continue paying down the debts you’re connected to? Many individuals want their family to be able to stay in their home regardless, so consider the amount of money it might take to pay off a mortgage or other debt. The loss of income is devastating enough, but attempting to try to cover a mortgage payment or other high amounts of debts can cripple a family. Evaluating your needs at the time of application will help you identify a sum for your life insurance death benefit coverage. You’ll want to complete a total accounting of your situation to identify areas of financial risk.
An Employee Bonus Opportunity
Life insurance can also be used by companies to provide a bonus to valuable employees. This is known as a 162 bonus plan. Rather than offering a direct bonus, the company will pay for the life insurance policy on the employee. That employee is able to identify whom he or should would like to receive the death benefits, giving them an added benefit of working for that company. Companies used this tool to provide executives with added benefits and financial protection under the life insurance umbrella.
A Way To Provide For the Loss of a Valued Employee
Employers might also purchase a policy known as a key man insurance policy to protect their loss if something were to happen to a vital executive or manager. This would help to provide payment in the short term so that the company could spend resource recovering from the loss and seeking to hire a new individual for that position. Keyman insurance policies are designed to help businesses, so it’s important to note that if your employer has taken out a key man policy for you, it’s not actually listing your beneficiary on that policy. In fact, the beneficiary listed will be your employer. If you have existing key man coverage, spend the time investigating your options for your own life insurance policy so that you can customize the beneficiaries on it.
A Way to Determine What Happens to a Business
If you’re a partner or a primary person within your company, a buy-sell life insurance policy will lay out the provision for what happens if you pass away. This, too, can be customized based on your individual needs and the needs of the company. It might outline the opportunity for other business owners to purchase your share of the business, dissolve the company, or take some other form of action. The sudden loss of a principal person in a business situation can present numerous challenges and the potential for arguments. A buy-sell agreement and life insurance policy can help to clarify what will happen in that event.
Complex Planning
An advanced life insurance agency can provide you with details on using life insurance to structure various complex designs. For example, the use of an irrevocable life insurance trust can have some tax advantages for the transfer of assets, which might appeal to you if there are many facets to your estate. Some individuals use the cash value in an indexed universal life insurance plan to help pay for their children’s college, too, so ask your agent for more details if you’re interested.
Making Life Insurance Work For You
The life insurance industry has evolved a great deal over the past few decades, leading to innovative products that are targeted to today’s consumers. What this means for you is that depending on your needs and interests, you can locate a policy that is most appropriate for your situation. Life insurance is an important cornerstone of your financial plan and should be considered in depth before moving to the application stage.
Whether you need income replacement, assistance for your family being able to pay a mortgage or other debts, or other complex needs, life insurance may be the answer to the questions you’re asking. Fell free to call us at 888-492-1967 if you have any questions or compare life insurance quotes online.
