Have you neglected finding a life insurance policy? Maybe you figure you do not need it since you are not married and have no children. Well, you would not be alone if this is the case since it turns out that only 59 percent of Americans have a life insurance policy, while around half of these individuals are underinsured. However, no matter what your personal situation is, it would be best if you did start to take life insurance into consideration for your retirement, estate planning and family financial planning strategies.
Provide for loved ones after passing away
Of course, the most common reason to obtain life insurance is to make sure your heirs and loved ones are taken care of once you have passed away. The benefits may be useful for your heirs to cover funeral expenses or to pay off the rest of a mortgage.
Even if you are still young you may want to think about obtaining life insurance. This may be especially true if you have had your parents co-sign on a student loan. In the case of your unexpected death, you will probably not want your parents to be saddled with your leftover college debt. You may also want to cover your children’s education costs or help make sure your parents have the long-term care they need.
Additional retirement income
Many people do not realize that life insurance is not only for after you die, but it can also benefit you while you are still alive during retirement. Permanent life insurance policies, such as universal life or whole life, can be utilized to accrue cash value. You may find this a useful strategy if you have already reached maximum contributions in your 401(k). Also, if you earn too much income to put money into a Roth IRA or make deductible contributions into a traditional IRA, a permanent life insurance policy may be a good option for you.
The cash value of the permanent life insurance policy can be used for any reason you want. You can even obtain loans from the policy’s cash value. Best part of all is that the loan is not taxed like it normally would be if you were to just simply withdraw cash value from the policy. However, you will have to pay some interest on a loan borrowed from your life insurance policy cash value.
Funds to pay medical expenses
Another use for life insurance is to help you pay for medical expenses in case you are gravely ill. Some insurance providers allow you to add provisions known as riders for an additional cost. These provisions enable you to use part of your death benefits while you are still alive to pay for medical costs resulting from chronic or terminal illness.
Consult a wealth management advisor
Ultimately, the decision of whether or not to obtain a life insurance policy and what type of life insurance policy should fit into a comprehensive estate planning and generational wealth strategy. It may be a good idea to consult with a professional financial planner in order to craft the best financial management strategy to fit your needs, goals, and circumstances.
Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.