Life Insurance is a good investment.
by Alicia Wanek | Staff Writer
We know life insurance is an important way to provide for our loved ones, but there are many benefits of having a policy that you may never have considered. Bobby Davidson, local independent agent, tells us more:
Life insurance has a tax-free death benefit. The value of the policy is the value that is passed along to your beneficiaries, and generally it does not have to be reported as income.
The cash value of a permanent policy increases over time. “The average policy will be equal to its cash value at ten years,” says Bobby Davidson, local independent agent. It just increases from there.
Purchasing a policy for children is a gift for their future. Frequently grandparents will purchase a policy for their grandchildren. Davidson does warn however, “It’s a wonderful gift as long as the grandparents have taken care of themselves first.” A life insurance policy can make sure the children have “guaranteed insurability.” If, God forbid, a child were to get a disease like cancer, they would not be able to purchase a life insurance policy later on even if they had no further complications. Some policies have the option to purchase additional insurance at intervals regardless of changing health.
Permanent policies are totally protected. Creditors cannot go after that money.
If your wealth accumulates significantly, the value of your insurance can be used toward estate taxes. This only applies to those who have estates large enough to be taxable at their death, but it is definitely worth discussing with an agent if it may apply to you.
“Oftentimes if designed correctly, you may elect to quit paying premiums, and the plan will go on,” Davidson explains. You may be able to use dividends to pay off the premiums after a certain amount of time, which can be especially helpful after retirement.
You can use the cash value of the policy in an emergency. If you have purchased life insurance but have little money in other investments, you can sell the policy for cash. This should only be used for real emergencies, but the money is there for you if you need it.
If you purchase a policy with a long-term care rider, you can use it to pay toward your long-term care expenses like an assisted-living facility when you need it.
Life insurance can be a wonderful component of your financial portfolio, but its primary purpose is still to take care of your loved ones when you’re gone. “You’d be shocked at the number of people who have not done planning with life insurance and wills,” Bobby reports. The tragic stories teach the biggest lessons. Bobby worked with a man in his early 30’s with a young family. He opted not to purchase a $1 million policy even after his health physical showed some questionable spots in his lungs. Six months later he died without a policy. Months later to get through her grief, his widow went to the Bahamas with some girlfriends and died in a tragic moped accident, leaving their children with absolutely nothing. We can all agree our kids are our best investment. Davidson can make sure you’ve got them covered. He offers a complimentary consultation he calls a ”360 Review”.
“It’s important to find coverage that is right for your family, and it can be complicated and confusing if you don’t have the right counsel,” says David Pidgeon, who says Davidson is constantly checking in with him to update, revise and alter his family’s policies over the last 20 years he has worked with him. “Insurance is not something you want to talk about”, says Pidgeon, “It’s something you HAVE TO talk about.”
For more information, contact your insurance agent or contact Bobby Davidson at 972.980.4884 or Bobby@davidsoninsservices.com for a complimentary 360 Review Consultation.
