5 Ways Life Insurance Can Help You Financially

Once you start to become financially responsible for other people, it’s important to consider purchasing life insurance. In addition, if you’ve made a large financial commitment — such as getting a student loan that your parents have co-signed for — purchasing a life insurance policy with them as the beneficiaries is a smart idea. 

But life insurance isn’t just about providing benefits to your dependents in the event you pass away. Here are five ways life insurance can help you financially.

  • It can offer more coverage through riders. There are other instances besides death that can cause you to lose your ability to provide for yourself. For example, if you become sick and can’t look after yourself anymore, you can get a rider that pays for your long-term medical care.
  • It can build cash value over time. If you purchase permanent life insurance, it can build cash value in addition to providing a death benefit. Because it’s tax deferred, it’s a powerful tool to accumulate a significant amount of cash value. 
  • You can borrow against it. A lot of life insurance companies allow you to borrow against your cash value for lower rates than a bank would charge. Note that the loan will be taken out of your death benefit. 
  • It can help maximize your retirement. When you have a significant cash value, you can leverage the funds as an asset to grow your retirement portfolio, as Investopedia advises. 
  • You can withdraw funds from the cash value. If you need money or want to make a sizeable purchase, you can take some funds out of your cash value. Note that your death benefit will diminish at a dollar-for-dollar rate — or even more, depending on the insurer’s terms.
  • You can cash out your policy. If you want to receive the full accrued cash value, you can surrender your policy. Note that this comes with significant surrender fees — plus, your beneficiaries will no longer receive any death benefits if you pass away.

Forbes reports that it’s important to keep in mind that life insurance is first and foremost a tool to manage risk. So before using it as a financial tool, you should make sure to pay off all your debts and maximize the investment opportunities you have through your IRA or other retirement fund.

Consult With an Independent Insurance Broker

To learn more about how a life insurance policy can help you financially, make an appointment to speak with one of our agents. Because we’re an independent life insurance broker and don’t work for any insurance company, we can advise you on the best type of policy for your financial goals. For more information, contact our offices today.