If you want to protect the people you love, life insurance should be an important part of your financial planning. It can provide a meaningful amount of money to your family, give you a way to leave a legacy, and much more.
What are some uses for life insurance?
The main benefit of a life insurance policy is to provide a death benefit to beneficiaries should you pass on. There may be a variety of advantages to the life insurance policy you choose, such as coverage for final expenses and growing your retirement savings. Here are some features you may be overlooking.
Living benefits
Some products include accelerated death benefits, which allow you to accelerate a portion of the death benefit while living, if you should be diagnosed with a qualifying illness. These benefits are subject to eligibility requirements. The funds can be used toward medical bills or any use of your choosing.
Coverage for final expenses
The national median cost for a funeral could end up costing thousands of dollars. One of the biggest costs for your family when you die is your funeral. You may leave behind end-of-life expenses such as medical bills, which will fall on the shoulders of your loved ones. Life insurance can help prevent that kind of financial and emotional strain on your family by covering the cost of your burial and other expenses.
Retirement savings
Whether you started retirement planning too late, or you worry you simply won’t have enough retirement income to meet your needs in your later years, life insurance can help supplement your retirement income with policies that feature cash value growth potential. You can access cash value through policy loans or withdrawals and the money could be used for a generally tax-free income stream.
Funds for your child’s college
Did you know that life insurance can be a great college funding solution? With permanent life insurance, you can protect your family and build college savings at the same time. With permanent life insurance, you have the opportunity to grow cash value by taking advantage of indices that are linked to the stock market when the market is high subject to a cap, while protecting yourself from loss when the market is low with a 0% floor. You can then use the cash value that you may accumulate over time to help pay college tuition costs, whether it’s an in-state or out-of-state college.
Business planning
Are you aware of the role life insurance can play in business planning? Whether you’re an entrepreneur thinking about how to protect your share of the business or are looking for ways to reward your top performers, life insurance could be a solution.
Talk to an agent to help
If you want to get up to speed on all the options available in your life insurance, consider making an appointment with an agent to discuss your policy today.
North American Company gives these tips on reviewing your life insurance policy.
Your life insurance policy can offer assurance and stability for your family should you pass away. But that policy needs to be revised and updated from time to time, especially when a life-changing experience occurs. Review your policy if one of the following events occurs.
Having a child
A new baby is likely a signal that it’s time to review your life insurance policy. Likely, this bundle of joy means a new dependent and your life insurance policy may need updating to account for this.
Getting married or divorced
If you’ve recently tied the knot or gone through a divorce, it’s probably a safe bet that you need to review your policy. Marriage means you could be sharing finances. If you pool your money together and start sharing accounts, it’s good to make sure your policy adequately covers your husband or wife, should you pass away. Similarly, a divorce probably means you’ll be going through a number of financial changes.
Here are some important insurance actions to consider:
Update your beneficiaries
A beneficiary is the person, business, or trust that receives the death benefit proceeds from your life insurance coverage when you’re gone. It’s likely that the person you’ll want to be listed as your beneficiary, depending on your life insurance policy, is your spouse. If you have life insurance coverage through work, remember to update your beneficiary on that policy as well.
Update your retirement accounts
Retirement accounts like IRAs and Roth IRAs, workplace retirement plans such as your Pension, 401(k) or 403(b), and FSA and HSA Flexible spending accounts allow you to designate a beneficiary who will inherit the account should you die.
Purchasing a home
If you’re planning to purchase a home and take out a mortgage you may want to take a look at your life insurance policy. Buying a home may be one of your biggest financial obligations. A life insurance policy can be smart financial protection for homeowners. A mortgage can be a substantial debt, and many mortgage lenders will want to ensure it gets paid even if you pass. If you die before paying off the mortgage, the debt will pass on to your family, and your spouse may not be able to afford to pay for the house on one income. With all of these factors to consider, it may be time to make an update or change to your life insurance policy. Options include:
Term life insurance
Term life insurance pays a death benefit if you die while the policy is in effect. You choose the coverage amount and how many years the policy should last. Most life insurance companies sell term life. New homeowners can buy a term life insurance policy timed to match the duration of their mortgage.
Permanent life insurance
A permanent life insurance policy can last until you die if premium requirements are met. It can also build cash value over time and is generally is more expensive than term life insurance.
Talk to a financial professional about how buying a home could affect your life insurance needs.
Planning for retirement
If you are approaching retirement age but think you don’t have enough saved, you may be exploring your options. One consideration is how life insurance can play a role in your retirement plan. This, as you’ve probably guessed, means you should consider contacting your life insurance agent to talk about a current policy you may have.
A life insurance policy’s primary objective is to pay a death benefit to your beneficiaries upon your death. You may be able to use the cash value in the life insurance plan to supplement income in retirement.
Often, life insurance can fall into the category of out of sight, out of mind; you purchase a policy and call it good. Resist the urge – review your life insurance policy should you experience any of these life events.
Change in employment
Having a change in employment, whether a new job or promotion, is also an opportunity to revisit your policy and possibly update your life insurance plan. Whether an increase or decrease in household income, the change can affect living standards.
Providing care for loved ones
If you function as a primary caregiver to a loved one, review your life insurance to make changes for their benefit. If you leave a young child behind, your spouse may need to work full-time to pay the bills. This often means paying for child care. Other costs might include cleaning the house regularly or shopping for groceries. Additionally, if you are a caregiver for an elder relative you should consider the financial value of the support you are providing.
Caregivers often have a significant amount of out-of-pocket expenses. According to the AARP, a majority of family caregivers report that they spend an average of over $7,000 annually in out-of-pocket costs related to caregiving needs.1 Should something happen to you, those expenses may still need to be covered. Life insurance can help provide for those costs.
To provide for others, it’s vital that you care for yourself emotionally and physically. But in case something does happen to you, a life insurance death benefit can help the beneficiary financially.
A change in your health
If you’ve become healthier through exercise or changed your habits in a way that significantly impacts your health, you could qualify for new life insurance rates. Lowering your blood pressure, giving up tobacco, or having surgery to reduce weight or rectify medical issues are examples of changes that might alter your health. Should you experience any of these changes, you may want to explore your policy options.
Talk to your agent
If you’ve experienced a change like this, or aren’t sure if it’s time to review your policy, contact your agent. He or she can help you better understand how your changes in life might mean a change in your policy.
We can assist you in your life insurance needs. Contact us at reynold@reynoldjones.com or 817.545.3900.
American consumers’ top three financial concerns are health coverage, savings goals, and living expenses.1 What if we told you their fourth financial concern, life insurance, had the potential to solve for the first three?
Let’s take a look at some reasons to LOVE life insurance and what it could do for you.
L – Low cost
Many don’t realize that life insurance doesn’t have to break the bank—there’s a policy out there that can fit your financial situation. Did you know, that for the price of three cups of coffee per month, you could buy a term life insurance policy?2 While affordability is important when considering life insurance, it’s also important to look beyond the price. What benefits does this policy include? How can it help me financially in the long term?
O – Options
That’s why a policy with flexibility can be important. We know our clients have individual needs and financial goals. And, as your life changes, your needs may change as well. Many life insurance policies have different features such as living benefits, cash value growth potential, and benefits you can use while you’re alive that may fit your unique life needs.
V – Various life stages
As you go through the different stages of life, your financial needs and goals can change. Whether you’re graduating college, getting married, buying a house, starting a family, or planning for retirement, all of these momentous occasions require more financial responsibility. Life insurance can walk alongside life with you and help you during these special milestones.
E – Extra protection
Studies of cancer survivors have suggested that between 33% and 80% of the survivors have used savings to finance medical expenses and between 2% and 34% have borrowed money to pay for their care or have medical debt.3 While the main benefit of life insurance is the invaluable death benefit protection it provides, many policies also come with living benefits, which may be used for a variety of expenses—including covering the costs of a major medical illness.
1Source: 2019 Insurance Barometer Report, LIMRA. Accessed January 2020.
2Source: LifeHappens, lifehappens.org/insurance-overview/life-insurance/. Accessed January 2020.
