If you’re thinking about how life insurance can help you, you may be thinking of the payout your survivors would get if you died prematurely or unexpectedly. Your family could use the proceeds of the policy to pay funeral expenses, loans and other liabilities and it would give your loved ones a replacement income. Indeed, historically the purpose of life insurance has been to protect those with a vested interest in the insured’s life by easing their financial burdens after a death.
But as our lives have become far more complicated and our financial concerns and obligations not so clear cut, life insurance products have appropriately become more sophisticated to meet these needs.
While the financial security of your survivors may be your primary concern, there are many issues in life that can cause hardship. People are living longer and healthier lives and this has, ironically, turned into a liability. Life insurance can protect your family if you die prematurely, but what if you outlive your ability to support yourself? Life insurance policies have evolved to meet changing needs in the 21st century. As such, some policies now include features that allow policy owners to accumulate cash that can be used later in life to support themselves.
As people’s lives have given rise to more common and complex concerns, life insurance has transformed into a tool that can provide peace of mind in a number of specific financial situations. Financial institutions, for example, may now require loan applicants secure life insurance to ensure that the money will be repaid if they die. Life insurance is now making it easier for people to pass on wealth to their heirs without worrying about the fluctuating value of their assets because of the volatile economy. The proceeds from life insurance are also being used to help pay estate taxes.
If you die prematurely, life insurance can protect your family. But if you live to be 100, life insurance can also provide you with financial security. If you have a specific financial concern, it’s likely that there is a life insurance product available to protect you. Life’s complicated, but it doesn’t have to be.
*The material provided in this article is for informational purposes only. We do not provide legal, tax or accounting advice. Please contact your own advisers for legal, tax and accounting advice.