Nearly half of Americans do not have any form of life insurance. When you realize how vital a life insurance policy could be to your beneficiaries and loved ones still remaining, this seems low.
A life insurance policy can aid in paying off any remaining debt such as a mortgage payment, student loans and allow your loved ones to continue without the financial burden that may be associated with your passing.
Unlike term life insurance, which lasts for a predetermined number of years, permanent life insurance lasts as long as you do. In addition to a longer expiration date, permanent life insurance has different coverage options than term life insurance.
Permanent life insurance policies have a cash value accumulation feature that grows over time, similar to a savings account or money market account. In some cases, you can even borrow money against the amount you’ve accumulated.
First, if you obtain a permanent life insurance policy when you’re young and healthy, the premiums are significantly lower. With the added benefit of a permanent life policy lasting for the length of your lifespan, it is a coverage that should be bought sooner rather than later.
Second, with the cash value accumulation, you can watch the value grow. With this benefit, you can keep the cash value intact, borrow against it or surrender the value and cash it out entirely ending the policy.
The cash value is tax-deferred until you withdraw funds. If you take out a loan against the funds or borrow against it, then the value is non-taxable. This also applies when the death benefit is paid out.