Assessing Your Need
Types of Life Insurance
The Value of Life Insurance
Life insurance is a crucial step in planning for your future and the future of your loved ones. It can fulfill promises made to your family if you are no longer around by providing a death benefit to your beneficiaries in return for premiums paid to the insurance company. Life insurance can also provide benefits while you are living.
Advantages of the Death Benefit
- Provides income tax-free money to your named beneficiary(s) that can be used to pay funeral expenses, debt, tuition, estate taxes or virtually any financial need you leave behind.
- Can provide business security by enabling partners to buy out the interests of a deceased partner and prevent a forced liquidation.
Advantages of Living Benefits
- The cash value growth of a permanent life insurance policy is tax-deferred (1), which means you do not pay taxes on the growth of the cash value unless the money is withdrawn.
- Loans (2) or withdrawals can be taken against the cash value of a permanent life insurance policy to help with expenses, such as college tuition or the down payment on a home.
1 Accumulated growth may be taxable upon withdrawal. If the policy is a Modified Endowment Contract (MEC), tax penalties may apply prior to age 59 ½. Consult a tax advisor on your specific situation.
2 Policy loans and withdrawals reduce cash value and the death benefit and may be subject to other charges outlined in the contract.
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