WHO NEEDS LIFE INSURANCE?
There are many misconceptions about the reason why someone should buy life insurance. Many people hate to talk about it for the simple reason that it makes us feel vulnerable. We would like to think that we could live forever. Others believe that they donít need it because, after you die, who cares? I will not be there to see it anyway, or because the house is paid off or maybe because their kids are old enough to work. The truth is that what people need is information about why they should get it. Life insurance is not only to protect your loved ones, even though it could be a good reason to get it; It could also help you build wealth, reduce your income tax payments, Buy time, replace income, and it could also generate opportunities for your family.
First of all, Life insurance could build wealth for retirement because it is not only something that you pay for to get protection and thatís all. Now days we have many life insurance options and one of them is called Universal life. It is simple, when you calculate your payment, your age and health in general is taken into account to get your rating or cost of insurance which changes according to your age. The idea is to charge more at the beginning of the policy so your payment is divided evenly for the rest of your life. How is it that it builds wealth? Well, the excess of cash is an extra value that stays in your account and produces more interest than the bank. A good idea could be to overfund your policy to get more interest in your cash value and take the money out when you decide to retire. You could be surprised on how much the interest over the interest comes up to at the end.
It also reduces your income tax payment. When you save money for retirement or pay for a life insurance policy, and you pay more than what the government allocates to you for that purpose, it is deductible. If you pay straight from your paycheck for this type of investment, the money is taken out of your account before taxes and therefore you never paid for it. It may be taxable when you take it out but, consider all the interest that was made out of the total amount and you will see that you come up ahead and with a big percentage over per dollar. When you invest ďtax freeĒ is as if the government was considering you as if you made less money than what you really made.
Life insurance also buys time for your loved ones. We hate to think that one day we are going to die but when that happens we would like to have our family focus on their grief instead of asking others for money to pay for our funeral expenses. The suffering of having to be somewhere else trying to make arrangements to make payments is unthinkable. Most of the life insurance companies will do that for you.
One of the things that we need to think about before getting life insurance is, can my family replace my income if I was to die tomorrow? If you wife works and you and she usually save more than what you make yourself, than, you may not need life insurance. What you might need is to pay for your funeral expenses while you are alive so the money that you save with all your sacrifice donít be lost paying for your last expenses but, if you really think about it, life insurance could be less expensive because we donít know how many payments we are going to make. It could be one or one hundred.
If our idea is to leave a legacy to our family we could chose the cheapest type of life insurance which is term. You are cover as you pay but it only lasts a period of time (usually a maximum of 30 years) but, it could give your family an opportunity to have what you couldnít when you were still alive. You could give your kids the opportunity to go to college or they could use the money to start a business or invest it to produce enough to maintain their social and economical status.
The idea is to be informed about what life insurance means. We should think about it because we get protection for our home, our car and things that are not as important as our familyís future. The only bad thing about it is that we donít know if our family could need it tomorrow. So who needs life insurance?
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