Everything from an untimely death or disability to suddenly finding out your home has been overtaken by termites can seriously burden family finances. Everyone, even young families, should have a financial security plan to protect against life and death uncertainties.
Life insurance should be one of the top priorities in a financial security plan. Buying a permanent life insurance policy early in life protects the surviving family in the event of early death, protects against future uninsurability issues, and creates a more affordable insurance policy.
A permanent life insurance policy is a tool that many know will protect the financial security of surviving family members in the event of a death. However, a permanent life insurance policy also provides a living benefit. Part of the premiums the policyholder pays toward the policy will go into a cash reserve that accumulates under a tax-deferred status. The living benefits can be accessed while the policyholder is still alive. The funds can be used to financially tackle some anticipated and unanticipated events of life, for example:
Coping with the Unexpected
Could you still provide for yourself and your family in the event of an accident or illness? Would your company still place money in your 401k plan if you become disabled? Could you live off of disability income alone? If the answer is an all-around “no,” then cash value in a permanent life insurance policy can be accessed to help you financially cope with the effects of an accident or illness.
Funding a Child’s College Education
Funding a child’s college tuition can often rival the cost of your home. Some parents purchase a cash-accumulating life insurance policy as part of a specific plan to pay for college. If you are interested in college planning with a permanent life insurance policy, a financial advisor and college funding calculator can assist you. A parent or grandparent might not buy their life insurance with the plan to use it for a child’s college expenses but still find it invaluable if planned grants, scholarships, or student loans fall short. Most financial aid applications don’t consider the cash value of permanent life insurance as an eligibility factor.
Generating Cash for a Business
The most recent economic recession should be a warning that any business can potentially be affected by circumstances they have little control over. If your company ever needs an influx of cash for long-term survival, you can quickly access the cash value in your life insurance. The time it takes to be approved for a lender-based loan vs. accessing your funds can be all the difference in the survival of your business. The same can be said for new business opportunities that require quick action and funding availability.
Providing Funds for an Emergency
There are countless emergencies, from your house needing a new roof to your vehicle breaking down, where your emergency fund may not be sufficient. These challenges can be eased by accessing the cash value in your life’s permanent life insurance policy.
Supplementing Retirement Income
A 2009 Reuters survey found that 83% of Americans were concerned that they could not retire comfortably. In addition to providing retirees with a death benefit for surviving spouses, permanent life insurance policies can also be a portal for consistent, tax-deferred accumulation of supplemental income for retirement. The cash value can be accessed through a policy loan or tax-advantaged withdrawal. Your financial representative can further explain how to add this stable asset to a retirement portfolio.
It is easy to see why a financial security plan that includes permanent life insurance can help you build a foundation to support many of the key planned and unplanned events in life.