Many people think they already know the answer to this question. The typical recommendations for purchasing some form of life insurance are the following major life events:
- Getting married
- Having a child
- Buying a house with a mortgage
- Taking out a loan
- Starting a business
- Becoming self employed
- Becoming a stay-at-home parent
Each of the scenarios above should cause you to consider your life insurance coverage and review the death benefit on your current policy. Life insurance in these cases is designed to protect your heirs from catastrophic debts in the event of your untimely passing by paying off loans, replacing lost income, or even providing the necessary expenses to replace a key business partner. We all know that no sum of money can replace a lost loved one, but it can certainly help the family stay on their feet and keep moving forward during the hardest of times.
There are other reasons to consider purchasing life insurance as well.
- Retirement income
- Legacy Planning
Many people desire to leave a certain amount to their children after they pass. If all your money is in the market, then the amount you can leave depends not only on what you have left, but also on how the market is performing at the time of the transfer. It’s also generally income tax free to your heirs. Life insurance allows you to purchase a specific amount of death benefit so that you can be confident that your heirs will have the amount you desired to leave them.
Additionally, life insurance can also be used for potential tax-free income in retirement1. It doesn’t work in every situation, so it needs to be discussed with your insurance agent. We recommend that you discuss any purchase of life insurance with a trusted professional. There have been times in the past when life insurance may have been sold incorrectly and caused consumers to question its necessity. Unfortunately, this has led some consumers to believe it is an extra expense that they can get away without purchasing. Working with a trusted insurance professional can help you gain clarity on the amount you may need to purchase and the type of policy that makes the most sense for your situation.
We are happy to help walk you through this decision. Give us a call today!
1Policy loans and withdrawals will reduce available cash values and death benefits and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change. You should consult a tax professional.
Bradshaw & Weil Wealth Management, LLC offers insurance products and services. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Life insurance typically requires medical and sometimes financial underwriting to qualify, and involves fees and charges, including potential surrender penalties for early withdrawal. Product and feature availability may vary by state.
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