Life insurance can be used for a variety of personal uses.
That’s a good question, so let’s look at the some of the ways that you can derive an advantage for using a life insurance policy to suit you individually.
Everyone knows how life insurance can be used to protect their family, but it can also be used to personally protect you.
Quick Guide to the Personal Uses of Life Insurance
- Single People and Life Insurance
- Personal Financial Obligations
- Funeral Expenses
- Savings or Investment
- Learn More About Personal Uses
There are many single people out there these days. Divorce rates are high and many single people either prefer to stay single or put off getting married until later on in life than they use to do several decades ago.
Society changes as do people in how they interact – that’s just the way it is these days.
Single people often don’t think about buying life insurance as they feel there is no need to do so because they have no financial responsibility towards anyone else.
That’s not entirely true however.
You might not be married, but as a divorced or single person, you still have financial obligations. Over the course of your lifetime, you run up debts such as your outstanding balances on your credit cards and other personal loans.
You have outstanding debts for the furniture you buy, the car or truck you drive, and other recreational toys you use for your personal pastimes such as a boat to go fishing, a camper which you use on weekends, a snowmobile or other things that give you pleasure.
You might say that if you die then the creditors can do what they like, but it doesn’t work that way. Why? Because someone is going to have to deal with your estate afterwards. It might be your aging parents or your siblings such as a sister or brother who’s going to have to settle up on your estate.
Is it fair that you should burden someone else with your financial mess? Life insurance can take care of these outstanding financial issues, and it won’t fall on the back of someone else.
Nobody likes or wants to think about dying but as unpleasant and uncomfortable as the prospect might be, death is inevitable and unavoidable – and so are taxes by the way.
You might not care what happens afterwards or maybe you do. One thing is certain – your surviving family and friends will care. The average cost of a funeral these days is around $10,000, and that’s not cheap.
You can easily afford a small life insurance policy that will cover this expense so it doesn’t have to come out of the pockets of the people who care about you. Do you really want to burden them with this expense?
Of course you don’t, so it would be responsible and wise to have this matter taken care before it’s too late because there’s no guarantee about what the future holds for any of us.
That might sound strange if you don’t know how life insurance works. But, you can use your life insurance policy as a savings or investment vehicle which you can use down the road.
Some people aren’t very good when it comes to saving or investing their money, but we’re all going to need money down the road when we get older. Everyone needs a nest egg of some kind because all of us eventually retire.
To make life insurance personally work for you, you would have to buy a permanent life insurance policy such as whole life or universal life. The reason is because permanent insurance policies not only covers you for death benefits, these types of policies also have a cash value accumulation feature which are not found in term life insurance policies.
A portion of the premium you pay goes to the cash value accumulation component of the policy. It builds up over time through a combination of the premiums you are making and also because it is interest bearing as the insurance company invests this money.
After a certain number of years, you have the ability to either surrender your policy and obtain the cash value accumulation amount or you can borrow against it. Theoretically, you are suppose to pay the loan back, but you don’t have to as it will simply result in a reduction of death benefits if the loan is still outstanding when you die.
Another great feature about borrowing against it is that the money you receive is generally non-taxable which is unlike most other investment vehicles you might use to invest your money.
You can use this money anyway you see fit such as a supplement to your retirement income or any other purpose that you need to use the money.
Life insurance has a variety of personal uses and can even be used if you own and operate your own business in a variety of ways.
Say you’re in your 70’s and you have $500,000 in CD’s that you plan to leave to your children. You don’t use the money. It’s just sitting there making 1 to 2%.
Question: Why not take some of that and buy life insurance?
For example, a 75 year old man in good health could buy a $250k policy for approximately $10,000 per year.
Like I said, you’re not using that 500k you have set aside in CD’s, and you might expect to live around 15 years, so why not invest $10k per year to get back $250,000 upon your death, which will be passed down tax free to your heirs?
In this example, if you were to pass away in 10 years, you’ve only put in 100k… or pass away in 20 years, you’ve only put in 200k, but your heirs will receive $250,000 tax free.
Please note if you have a quote for life insurance which you are considering as an alternative to CD’s or annuities to pass to your heirs, and want to see if it’s a good deal to buy life insurance, visit our Wise Investment Life Insurance Calculator.
You always want to talk to an independent agent like myself. We can access and research dozens of companies so you are assured we will find the best policy at the most affordable rates. If you have health concerns, don’t let that dissuade you because we can give you valuable advice and help you to find a policy that suits you.
Whatever your needs or questions then please call me direct at 877 – 443 – 9467.
*While we make every effort to keep our site updated, please be aware that "timely" information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.