Life insurance can be an effective way to protect your loved ones financially in the event of your passing. You may already know that permanent life insurance offers permanent coverage, or coverage throughout your life. But permanent life insurance offers other benefits that you may not have previously considered. If you’ve been on the fence about getting permanent life insurance, these are some of the benefits that you may want to consider:
Builds cash value
Permanent life insurance such as universal life insurance builds cash value over time, which you can access for any reason. The cash value can be convenient for a variety of purposes, such as supplementing retirement income. Retirees often choose to use the cash value of their permanent life insurance for additional cashflow during market downturns, when they might not want to withdraw as much from their investments. This can also help manage taxes.
Provides lifelong coverage
A significant benefit of permanent life insurance is that there is no time limit on the death benefit. As long as you pay the required premiums, your beneficiaries will receive the payout in the event of your death. They can use the death benefit any way they wish, including to cover final expenses, such as funeral costs and outstanding debts. It can also be used to replace lost income or to provide financial security for your loved ones. Some people also choose to use all or part of the death benefit to leave charitable donations to an organization that was important to them.
Offers a choice between flexible or fixed premiums
Two popular types of permanent life insurance are universal life insurance and whole life insurance. Universal life insurance provides more flexible premiums which can be a good fit for people whose cashflow may vary. With this type of insurance, you can opt to pay higher premiums in some years and lower premiums in others (within certain limits). On the other hand, whole life insurance provides the stability of fixed premiums.
Acts as a legacy or inheritance
Your permanent life insurance policy’s guaranteed death benefit can act as an inheritance for your children or heirs. In most cases, the death benefit payout a beneficiary receives is generally not taxable. For some people, permanent life insurance can be one way to leave a legacy for their family. There are no restrictions, so beneficiaries can use the payout for anything they like—that can mean a down payment on a house, tuition payments, or just saving for the future.
Source: iQuanti
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
