Top Reasons For Life Insurance

Are you missing a crucial element in your retirement strategy? Life insurance deserves a spot on your planning checklist. Here are some compelling reasons to consider:

1. **Covering Mortgage or Debt**: Ideally, retirement means living without the burden of a mortgage. Many opt for term insurance to cover mortgage payments for their loved ones.

2. **Social Security Replacement**: If one spouse passes away, the remaining spouse loses the lower social security benefit, leading to financial strain. A combination of permanent and term insurance can help offset this loss.

3. **Pension Replacement**: Some pension plans diminish or eliminate benefits for surviving spouses. A life insurance payout can bridge that gap, allowing you to maximize your pension without jeopardizing your spouse’s financial security.

4. **Income Protection**: The untimely death of a working spouse can derail a family’s finances. Life insurance can provide the necessary funds to maintain a stable lifestyle and protect retirement savings from being depleted. There are options available to keep the policy active even during job loss.

5. **Childcare Support**: Raising children, especially through college, involves significant expenses. A term policy with locked-in premiums ensures that the surviving parent can continue to meet those costs.

6. **Creating a Family Legacy**: If you wish to leave something behind for your loved ones, the right permanent insurance can guarantee that they receive a financial benefit.

7. **Final Expenses**: Some individuals may need a smaller policy to cover funeral costs or debts. Permanent insurance is often recommended here, as it ensures coverage that won’t lapse after a set term.

8. **Business Partnerships**: Life insurance can safeguard a business by compensating for lost income if a key partner or employee dies. It can also facilitate the buyout of a deceased partner’s share, ensuring the business continues smoothly.

9. **Charitable Contributions**: Using life insurance for gifting can significantly enhance the impact of your donations. You can contribute a larger amount with a relatively modest premium. Additionally, if your beneficiary is a charity, you may even receive tax benefits.

10. Estate Tax Considerations. While the Federal estate and gift tax exclusions have been significantly elevated (reaching $5.34 million in 2014), the estate tax rate remains steep at 40%. Individuals possessing land or substantial assets may face challenges, especially if their holdings are not easily liquidated. Life insurance is frequently utilized as a strategy to ensure sufficient cash is available to cover estate taxes, thereby avoiding the need to liquidate family assets.

Determine the amount of life insurance that is appropriate for your circumstances.

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*Please note that we are not tax advisors and do not offer tax advice.

See our Professional Disclaimer.