People usually understand life insurance as coverage during death situations only without knowing that it covers life and death financial security. There are a lot of life insurance policy covers that many people are not aware of. You will learn how a life insurance policy at https://sogoinsurance.com/san-antonio/life-insurance/ ensures the financial security of the insured and dependents in life-and-death situations.
Flexible source of cash
Life insurance offers tax efficiency when properly funded and structured on various aspects:
- build cash value
- augment retirement savings
- help pay for college
An insured person can access principal and tax-deferred growth for financial future needs. There are ways to use the cash value to the insured person, such as:
- Withdraw cash tax-free. If the amount you withdraw does not exceed the amount you have paid in premiums. The withdrawal cannot be subjected to income taxes.
- Borrow the policy’s cash value for retirement income or another purpose. You are not required to repay the loan though it accrues interest. The amount is deducted from the death benefit of the policy. There are things to remember, like accessing the policy cash value through loans. It causes a permanent reduction of policy cash value and death benefit.
- Zero penalties on withdrawal or distribution. There are no income tax penalties for withdrawals that are taken from the life insurance policies. There are no minimum requirements for the distribution as well. It depends on which life insurance premium you choose.
Dependents can have funds for living expenses!
The common rule of thumb is life insurance death benefits worth 10x your income. When you have a policy of that size, the people who depend on your income still have money to cover the ongoing living expenses. The beneficiaries can use policy benefits to cover the daily expenses for:
- rent
- mortgage payments
- utility bills
- groceries
Conclusion
Purchasing life insurance depends on your financial goals and resources. You would want more when you like to cover the other major expenses. A life insurance policy pays for the children’s college education so that your family does not need to take student loans. Life insurance family can save you from financial burden when an unwanted accident happens and you need money for hospitalization.
An insured person protects their life from unwanted incidents that need finances for the medication. It also saves the insured person from having funds for daily expenses to fill funds while unable to work. Or worse, if death happens to the insured person, life insurance covers the funeral expenses without placing a financial burden on the family.
