There are several times in life when you should consider buying or evaluating life insurance. These events include major milestones, like starting a family or retirement age.

Financial Security

A major reason to take out a life insurance policy is to ensure your loved ones have a financial safety net during death. Depending on your situation, that may mean covering debts, providing for final expenses, or even putting money away for their future.

Life insurance policies often build cash value over time, which can be accessed as loans or used to supplement retirement income. However, accessing that cash value will reduce the available death benefit and coverage. Another benefit is that it can help your heirs avoid liquidating assets to pay estate taxes or final expenses. This can be important if you have children who will inherit your estate and you want to make sure they get what they deserve. In addition, many term or permanent life insurance policies can provide the money needed to cover college tuition when your children are ready. This can be an excellent way to give them the independence they need to pursue their dreams.

Taxes

Many life insurance New York policies come with tax benefits that can help offset costs. For example, when you die, your beneficiaries don’t owe income taxes on the death benefit (as long as the policy is structured properly). Additionally, if you borrow or withdraw from the cash value of a permanent life insurance policy, you don’t pay taxes on amounts that are above your “cost basis” or what you’ve paid in premiums.

However, the ROI on the cash portion of a whole life insurance policy is typically much lower than an alternative investment option, like a Roth IRA or 401(k), so it could take years to build up enough money to withdraw. That’s why working with a financial professional who can find solutions that meet your needs and budget is important.

Peace of Mind

The peace of mind that comes with a life insurance policy lets you know that your family will be taken care of if something happens to you. This may help alleviate the financial burden they would otherwise face, giving them some relief during a difficult time.

A payout from a life insurance policy can help dependents cover any income shortfall that might be felt after you pass away and help pay for any outstanding debt. It can also be used to pay funeral costs or children’s education expenses. You can choose between term or whole-life policies depending on your situation. A financial professional can help you determine your needs, discuss the options and benefits available, and find the right solution for your unique situation. 

Final Expenses

Many people choose to get a final expense life insurance policy so their family can have a financial safety net when they pass. This is especially true if they need more money saved up or regular insurance that can help them. These policies, also known as burial or funeral insurance, usually pay small but meaningful amounts that your beneficiaries can use to cover traditional costs such as a funeral or memorial service. The premiums are typically much lower than the typical term or whole life insurance policy, and you do not need to undergo a medical exam to qualify.

Some final expense policies even build cash value, although it is important to note that borrowing from this will reduce the death benefit. This can be a good alternative to self-funding, which can be risky if the funeral home or service provider goes bankrupt or changes owners before you pass away.