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!