When most people think of life insurance, the first thing that usually comes to mind is death. After all, the main reason people think to invest in life insurance is that it pays out a set amount of money to their beneficiaries when they die.
What most people don’t realize is that life insurance can be used to provide lifelong protection.
Here are five things that it can do in life.
1) Fund your child’s education
2) Buy a house
3) Cover emergency medical expenses
4) Start a business
5) Allow you to retire sooner
This is all possible because there are two types of life insurance coverage – Term Life insurance and Permanent insurance.
Term Life Insurance
Term Life insurance provides protection for a set period of time, such as 10 or 20 years. You pay into the policy regularly, and should you pass away during the term, your beneficiary receives the set amount, regardless of how much you’ve paid into the policy. However Term Life insurance is like renting an apartment – you don’t actually own anything.
Investing in Permanent insurance is like buying a home – your expenses may be higher at first, but you’re accumulating wealth. When you buy Permanent (or Universal Life) insurance, you are investing in insurance that offers protection at a set premium for life. The insurance company manages your policy, and builds up the death benefit and cash value in a tax-advantaged setting.
The funds within this life insurance policy are always under your control – meaning you can ‘borrow’ from it any time you want. No need to apply for loans from the bank or fill out forms – as long as the cash value is there, just ask for the money and it’s yours to do with as you please.
Which brings us back to the list of five things life insurance can do for you in life. These are only five suggestions – there are many more ways you can make use of the living benefits in your life insurance. However you choose to spend it, just know that life insurance is for so much more than simply a pay out after death.