Everyone knows the best way to provide for your family if you pass away is through life insurance. Think about it, if you are the majority breadwinner or splitting the employment load, if you, your spouse, or both of you pass, how will your survivors make out financially? Would they need to sell the house or liquidate investments just to make ends meet? No one wants to think about it, but the hit by a bus strategy is one that families should look at and protect those you leave behind, especially if it is unexpected.
Have you ever thought about life insurance to become debt-free? Certain whole life products can be used as your own bank. You target an amount you need to pay off your home, car, and/or credit cards. An insurance agent can work with you to create that plan using life insurance cash value to pay that off a lot of times sooner than you think, and you still have a death benefit protecting your family. Using this strategy doesn’t have to cost more than your current monthly payments to your debt. It’s really a neat concept and a great way to reduce debt, become debt-free and protect your loved ones.
What about using life insurance to save for college. Sure, there are other vehicles like 529 plans, but those are subject to the ups and downs of the market. What if you contributed all that time, only for a downturn in the market right before the freshman year? Life insurance could be used to supplement some of those other savings’ tactics that may be more volatile. Some of those plans are restrictive and can only be used for qualified education. What if little Johnny doesn’t go to college? Sometimes those other vehicles would hit you with a penalty if used for non-educational purposes. That cash value could then be used for a nice down payment on a house, paying for a wedding, or future purchases. There could also be an advantage for you using a life insurance product, so little Jane or Johnny qualify for a little more financial aid. Cash values from your life insurance are not counted as assets when applying for financial aid, but 529 plans and investment money are.
It is recommended that you have 6 months’ reserves saved in case of an emergency. Are you prepared to cover you and your family’s expenses if you get laid off? Wait, you took out a life insurance policy years ago. What is the cash value? Maybe you are in better shape than you thought
So, you say I saved and invested well for retirement. Can’t wait to travel and see the world. Wait, the market takes a dump on you right after turning in the paperwork. You would normally withdraw from your investments, hopefully when they are up, but what if it declined and now you have less to enjoy retirement. The whole life policy you have will allow you to borrow from that, giving time for your investments to bounce back. Also, withdrawing from the cash value growth is tax-free. Not all your retirement investments can say that
Life insurance is an asset that could help during the downturns in the markets when needing cash. It protects your loved ones and can leave a legacy for your children or grandchildren. If you don’t have this as a piece of your portfolio, ask your advisor why or find one that can explain the ins and outs of owning this important asset. Whole life insurance isn’t just to leave a legacy but can be used in so many different ways. Your grandparents would be proud.
