Starting a conversation about life insurance is virtually sure to be greeted with the same uncomfortable silence reserved for hearing tests. After all, when you talk about life insurance, you’re talking about dying. Who wants that? Please allow me to break the silence and provide some proposals for starting a discussion about this vital topic.
Tax-free death benefits
Many people wonder about the tax consequences of obtaining life insurance benefits. None is the usual answer because the earnings from life insurance plans are generally tax-free, regardless of the amount ($10,000 or $10 million).
The term may become permanent.
“Which is better, term or permanent?” is a common query. In most circumstances, I advise consumers to analyze the purpose of acquiring the policy before responding. For example, if you want to cover the expenses of raising children, term insurance is generally the ideal choice as your kids will eventually be able to support themselves financially. On the other hand, conversion may be an option if permanent coverage looks preferable to your existing term insurance. Many term insurance policies allow you to convert your coverage from term to permanent. Contact your insurance company to learn about the rules, time limitations, and fees associated with such a transfer.
Your beneficiary trumps your will.
If your will specifies who will inherit your property, be sure your life insurance beneficiary selections match. A beneficiary designation, which is the area of the life insurance application where you choose who will get the funds, supersedes a will.
Early benefit access is available.
To assist in paying for medical expenses, you may be able to borrow money from your insurance policy’s death benefit. This phrase, known as an accelerated death benefit rider, may assist in alleviating the financial burden associated with a severe illness. Specifics may vary depending on your policy.
Get some insurance. It won’t cost a fortune.
Early in a family’s life, life insurance requirements might be high. The US Department of Agriculture estimates that raising a child in the US costs about $20,000 per year. And that’s without going to college! Why? An online calculator may help decide if one’s life insurance policy is enough, which is a must. A guy in his 20s or early 30s may acquire $500,000 of coverage for $20 or $30 per month for the next two decades until his kids are old enough to live independently (still knocking on wood).
It may change.
You may see life insurance as stiff and unbending. As previously stated, many plans allow you to choose coverage levels or types. Some may even let you avoid paying premiums if your funds are tight. Before deciding to reduce or increase coverage, be sure you fully comprehend all pertinent details. You should contact your insurance provider first to prevent unwanted steps.
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