It’s that time of year. The new year is here, which means it’s resolution season. What are your resolutions for 2019? Do you want to lose weight and get in shape? Do you want to further your education or go for that big promotion? Is this the year you finally learn to play an instrument or write your great novel?
Nearly 40 percent of Americans make resolutions each year. Unfortunately, less than half stick with their resolutions through six months.1 Resolutions are difficult because they require focus, discipline and ongoing effort. It’s easy for life to get in the way of your big goal.
There’s one resolution, however, that’s fairly easy to achieve. It’s life insurance. If you don’t have life insurance, or if you feel you may be underinsured, make 2019 the year you finally make a change. Life insurance can protect your family, but it can also provide other valuable benefits to your financial strategy. Below are a few reasons why life insurance should be on your resolution list in 2019:
At its core, life insurance is a protection tool. You pay premiums each year. In exchange, the life insurance company provides a lump-sum, tax-free death benefit to your beneficiaries after you pass away. Your beneficiaries can use this money however they wish. For example, they could use it to fund college, pay down debt or simply overcome financial challenges that arise after your death.
Life insurance is especially valuable if you’re a financial provider for your family. Consider the challenges they may face if they were to lose your salary. Would they be able to pay the mortgage? Could they pay their bills and cover basic expenses? Would they be forced to move or dramatically downsize their lifestyle? Life insurance removes the uncertainty surrounding those questions and allows your family to live comfortably after your passing.
Even if you’re not a financial breadwinner, you probably still make contributions to the family. Those contributions would have to be replaced if you were to pass away. If you died, would your spouse have to pay for child care? Would they need assistance with other tasks, like home maintenance or meal preparation? Consider the value of your contributions to the home and how life insurance could help your family maintain their standard of living in your absence.
Life insurance provides valuable protection in the event that you pass away. Of course, the best-case scenario is that your spouse and children never have to make use of your life insurance policy. What happens if your policy goes unused?
If you have a permanent life insurance policy, you could someday use it for tax-deferred growth and even tax-efficient income. Permanent life insurance policies, such as whole life and universal life, have what’s called a cash value account. A portion of your premium goes into this account, where it accumulates on a tax-deferred basis.
The manner of accumulation depends on the type of policy. Whole life policies collect dividends from the insurer. Universal life policies earn interest each year. Either way, you don’t pay taxes on this growth as long as the funds stay inside the cash value account.
If you ever need supplemental income, you could take a tax-free loan from your cash value account. You can repay the loan over time by adding on to your premiums. If there’s an unpaid loan balance when you die, that amount is simply deducted from the death benefit.
You can also withdraw funds from the cash value account. If you take a withdrawal, you don’t have to make a repayment. You can withdraw your premiums tax-free, but you may have to pay taxes if you withdraw your accumulation.
Perhaps you know you need life insurance but don’t feel like now is the right time. As is the case with many things in life, there’s no time like the present to address your life insurance need.
Life insurance premiums are based on a number of factors, but one of the biggest is your life expectancy. Everything else being equal, the shorter your life expectancy, the higher your premiums. Insurers look at your age and your health to estimate your life expectancy.
The younger you are, the longer your life expectancy is likely to be. As you age, your life expectancy naturally shortens. You also become more vulnerable to health issues like obesity, high blood pressure, digestive issues, cognitive problems and more. Simply put, now is likely your best opportunity to address your life insurance need in the most cost-efficient manner.
Ready to check this resolution off your list? Let’s talk about it. Contact us today at Northern Plains Insurance and Financial. We can help you analyze your needs and determine the right policy for you. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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