Life Insurance Anderson is a financial safety net that gives you peace of mind. In exchange for regular premium payments, a lump sum called a death benefit is paid to your beneficiaries when you die.
It’s a good idea to review your beneficiary selections regularly to account for changes in your family situation. You can make changes by submitting a formal, written notification to your insurer.
The peace of mind that comes with knowing your loved ones will be taken care of after you pass away is a powerful reason to consider life insurance. A life insurance policy is a safety net that provides financial security in the event of your death, covering expenses such as funeral costs, debts, mortgage payments, and estate taxes. It can also offer a lump sum to cover living expenses, and it may help replace your income and prevent immediate financial hardship for your family.
In addition, some policies build cash value that can be accessed and used to meet short-term financial needs, such as paying for child care or medical bills. You can choose from a variety of options and add riders to customize your coverage. However, it’s important to note that if you miss a premium payment, your policy will lapse and the beneficiaries will not receive any death benefits. It is possible to reinstate a lapsed policy, but it usually involves paying all overdue premiums with interest and possibly re-taking a health questionnaire or undergoing a medical exam.
Many people believe that it is a good idea to have life insurance so that in the event of their death, their family will not be burdened with excessive costs or financial obligations. If you have a dependent who relies on your income, it is also a good idea to purchase life insurance to help cover expenses such as mortgage payments, education, and living costs.
Financial Protection
Having life insurance provides peace of mind that your loved ones will be taken care of financially in the event of your death. It can help pay off a mortgage or other debt, cover funeral costs, and provide a steady income for your spouse, children, and other dependents to maintain their standard of living.
The death benefit or face value of the policy is the amount that the insurance company will guarantee to pay to your designated beneficiaries upon your death. It is based on the type of coverage you purchase and your personal circumstances. Your age, health, and lifestyle factors will all affect the cost of your coverage.
If you die without having adequate life insurance coverage, your family will have to sell off assets or use other resources to pay your final expenses and debts. This can put a strain on your family at a time when they will already be grieving the loss of a loved one. Life insurance can help to ease the financial burden and allow your loved ones to pay off debt, continue living in their home, and pursue their dreams.
A term or whole life insurance policy provides a lump sum, income tax free death benefit to your loved ones. Some policies also build cash value, which can be withdrawn or borrowed from the insurance company, depending on the policy type.
You can often customize your policy by adding riders to provide additional protection or benefits, such as the ability to skip premium payments if you become seriously ill or to add coverage for children. Your agent can help you decide if these features are right for you.
You can also modify your life insurance coverage through regular reviews and adjustments. A review is particularly important after a major life event, such as a birth, divorce, or remarriage. You should also make sure your beneficiary information is current. In most cases, you can change your beneficiaries with a simple written request to the insurance company.
Tax-Deferred Growth
A key benefit of life insurance is that it allows you to grow your investment without paying taxes on any growth until you withdraw it. This tax deferral is similar to the way many retirement savings accounts, such as 401(k)s and IRAs, work. Typically, you won’t pay taxes until you withdraw your money at least after age 59 1/2 or later, depending on the type of account or contract.
In some cases, permanent or whole life insurance policies can also accumulate cash value in addition to the death benefit. This cash value is a reserve of money that you can access while still alive and use to meet your financial needs, such as supplementing retirement income or covering living expenses. This cash value accumulates tax-deferred and is available to you when you need it. It also reduces your taxable estate upon your death and provides other benefits that are not available with traditional savings accounts or bank Certificates of Deposit (CDs).
For example, you can borrow against the cash value in whole life policies to cover a short-term need for cash. Or you can choose to take a portion of your death benefit in the form of an installment loan to provide income for your beneficiaries after your death. The amount you borrow is not subject to interest, nor are you required to repay the borrowed money.
The death benefit of permanent or whole life insurance may be used to help fund a trust for the care of children with special needs who cannot be self-sufficient after their parents’ death. This can be done by transferring the death benefit to the parents’ special needs trust, which is managed by a fiduciary and can be structured to maximize federal and state benefits.
Because each individual’s situation is unique, it’s important to reevaluate your life insurance program on a regular basis. This is especially true after significant events, such as marriage or divorce, the birth or adoption of a child, major purchases like a home, or even significant medical bills. A Thrivent financial advisor can help you develop a plan to ensure your life insurance is working for you and your family.
Coverage Options
There are many different life insurance policies available. Each policy is unique, but they all share one thing: they provide a lump sum of money that will be paid to your beneficiaries after you die. These funds can help your family cover funeral expenses, ongoing bills and debts, lost wages, and even future college tuition.
The type of coverage you choose will depend on a number of factors, including your personal preferences and needs, budget, and length of desired coverage. A financial professional can help you understand the different types of life insurance and find a policy that meets your goals.
Term life insurance is generally the most affordable option, as premiums remain the same for a defined period of time (typically 1, 5, 10, or 30 years). You can also purchase a yearly renewable term policy that lets you renew without a medical exam for a year at a time – but this will increase your cost each year.
Whole life insurance is a permanent policy that builds cash value and offers flexible premiums. You can withdraw or borrow against the cash value, and some insurers offer annual dividends to help offset the cost of your coverage.
Universal life insurance is a hybrid policy that provides both a guaranteed death benefit and a flexible premium. You can pay more or less than the planned amount of premium for a given policy term, and you can adjust your death benefit or living benefits1 in accordance with your changing financial circumstances.
Other types of life insurance include indexed universal life, guaranteed universal life and variable universal life policies. These offer flexibility and a range of benefits such as flexible premium payments, a potential tax deduction on any accumulated cash value, the ability to change your death benefit or living benefits1, and more. A financial professional can help you decide which type of life insurance is right for you.