In this piece we want to discuss how to make life insurance benefit you throughout your life. When you think about life insurance, you probably see it like most people, i.e. that it is something one needs only to protect their family or loved once in case of a sudden death. Well, that is a misconception. Here is an overview of :
How to make life insurance benefit you from birth – 18
At this age, your parents buy a policy for you. However, not only parents have to purchase a policy, juvenile policies can also be bought by grandparents and other family members. These types of insurance policies can be used for example to create an early college fund. However, the greatest benefit is that they are able to guarantee your insurability for the rest of your life. If you are a parent and have a young child at home, what is your plan for their future financial needs? How much money do you put aside each month, year, etc. to have a fund ready when the time for major expenditures comes?
18 – 30
At this point you enter the final phase of childhood and transition into adulthood. If your parents started you right with a juvenile policy, it can now cover some of your schooling needs. After school you enter your first job or start generating an income in some other way. You should definitely use part of this income to repay your policy loan. This will keep its cash value up. You’re probably not making much money, but again, you should always plan to build an estate for yourself. You should start saving money for future investments such as a house, car, wife, child and so on.
This phase of your life also offers you a great opportunity to secure a large insurability amount for very little money. You can purchase a million dollar Term Policy for literally spare change. It may also be a good time to get a a Whole Life Policy such as 30 Pay. This is a cash building policy, which offers low premiums due to your young age and its time span.
End of school and mostly likely also end of your first few jobs. You have some experience now, some of your education costs have been repaid and you are starting a family. If you haven’t bought your first home yet, because you were too busy traveling and starting a career, then this is the time to look at a property. You also have wedding costs to cover. If you and your parents took our advice above, then you now have some good chunks of cash sitting in your policies. Your Juvenile Policy and your first adult Whole Life are ready if you need them.
When applying for a mortgage, a policy that is good to consider is a Decreasing Term Policy. This policy can be used to cover the mortgage on your home. And even if first health challenges come along, remember, you already have policies to benefit from, which guarantee you’re insurable. Although this age group is usually still easily insurable.
Now you’re really in the middle age phase and retirement is knocking on the door. Health issues start piling up, which makes your insurability harder, and expensive. Again, if you have previously set up your policies correctly, then now you have nothing to worry about. What you do want to reevaluate though is, if your current policies are able to protect all your assets. Yes, the principle of Asset Protection comes into play right here the most. You are more than likely paying off your loans and your personal worth has increased. But, does your life insurance coverage secure all those assets if your family should be put in a situation, where it has to replace your income?
And here come your golden years. You have worked your way up to the age of retirement. How much do you have saved up? What are your total assets worth? How much is in your 401K or other retirement funds? If you paid off your mortgage, great. How to benefit from life insurance just before retirement? Well, having a couple of policies though secures your home even if something happens to you. At this point in your life you can enjoy the fruits of your labor and savings. One way you can use your cash building policies that you held on to is to get steady monthly paychecks.
One major event happens at this phase and that is the expiration of your 401Ks. Remember? The money you’ve been putting away tax free? Well, now you have to withdraw it and pay income tax. You have no need for worry though, because you can easily roll this money over into life insurance policies even if you had major health issues. You are insurable, because you held onto your policies you started in your youth. These are a nice and safe way to save you on some taxes.
How to make life insurance benefit you – summary
These are some of the basic methods of how to make life insurance benefit you. Each phase of your life is very different. Each one of our life’s paths is very different. Our list only presents the basic concepts to introduce to you the possibilities you may have not been aware of. We recommend you to get in touch with us and allow us to discuss your personal needs with you.