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Do You Need Life Insurance?

September is Life Insurance Awareness Month and this year the theme is Life Happens. The last two years have certainly taught us that life does indeed happen, whether we’re prepared for it, or not.

Most people tend to think of life insurance as something that provides value after they’re gone. The benefit paid out to your family if you pass away is vital, as it gives them peace of mind. They can pay final expenses and debts, such as car loans or mortgages.  It can pay for kids’ college fees. And in most cases, it is tax-free.

However, a well-planned life insurance policy can provide much more than that and should be part of every financial plan.

There are policies that can include protection from a disability should you be injured or become too ill to work.  They can also have what’s called a long-term care rider, which provides money for care if you need it at any time. That’s particularly useful since getting long-term care insurance can be difficult on its own.

There is also an option to borrow from the cash value of a whole life policy. The policy must have accumulated cash value to do this, so talk to a financial advisor and find out how and when you’d qualify to do this.

One example of using this feature is people who used this loan option to weather the economic hardships of the pandemic. 

“You are essentially borrowing your own money,” explains Lawrence Merl, Senior Vice President, Investments, for David Lerner Associates. “Since it’s your money there is no loan application process and it’s not regarded as income by the IRS.”

Bear in mind that it is a loan and must be paid back.  Treat this as you would any other loan. If it is not paid back, you put your loan at risk of exceeding the policy's cash value and causing your policy to lapse.

Considering all the benefits you and your family can get from a well-structured whole life insurance policy, the answer to the question, do I need life insurance, is a resounding yes!


Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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