There are many benefits of life insurance that can make it a worthwhile purchase. The most essential benefit is that life insurance provides your beneficiaries with financial support, but there are other advantages, too.
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While everyone has their own reasons to buy life insurance, a life insurance policy offers several benefits.
Life insurance provides valuable peace of mind. After your death, your policy beneficiaries will receive a benefit that they can use to pay for funeral expenses, mortgage payments, education costs, and other expenses. You’ll have the reassurance that your beneficiaries will be financially supported after your death.
Your life insurance payout isn’t considered taxable income, so your beneficiaries won’t have to report the money on their taxes. As a result, they get to keep the full amount of the benefit.
If you buy life insurance with certain endorsements or riders, you can customize your coverage so that you can access some of it while you’re still alive. A long-term care rider allows you to access the benefit for expenses like long-term care facilities or nursing home care. Some policies allow you to use your death benefit to pay for care if you are diagnosed with a terminal illness.
If you buy a whole life insurance policy and consistently make your payments without letting the policy expire, your premiums will never increase. You’ll always know what you’re responsible for paying, and you won’t have to worry about being priced out of being able to pay for your insurance.
In addition to financially supporting a beneficiary like a friend or family member, you can donate some or all of your life insurance benefit to charity. This can be a meaningful way to support a special cause.
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If you buy permanent life insurance, like whole life insurance, your policy includes a cash value portion. Part of your premium contributes to the cash value, and that value grows over time. You can borrow against your cash value without paying income tax and can use the money to pay for expenses if needed.
However, your insurance’s cash value won’t usually be added to your death benefit, meaning it won’t be passed on to your beneficiaries. But if you withdraw from the cash value while you’re alive and don’t pay that money back, your death benefit will be reduced by the amount that you borrowed.
Life insurance can offer many benefits, but you’ll need to think carefully about whether it makes sense to buy it as an investment.
Deciding whether life insurance is worth it is a personal decision, and the benefits that life insurance offers will depend on your finances, family situation, and goals. You can get free life insurance quotes online today to explore available plans and decide if one is right for you.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
