Most financial experts believe that life insurance is the basis of good financial planning. However, it is not a “one size fits all” product. For instance, it is often a very wise choice to purchase Life Insurance when you are single and young and then purchase health insurance as your age increases. If folks depend on your income, life insurance will replace that lost income should you die unexpectedly.
Estate taxes, on the other hand, can be a serious tax consideration even for those with modest incomes. Some wealthy individuals carry cash value in life insurance policies in order to bypass the high inheritance tax that applies to estates. Other wealthy individuals, however, believe that paying estate taxes with a life policy is a tax-sheltering activity that they never want to engage in. That is why some wealthy people to invest their money in mutual funds and other stock markets instead.
In terms of your own finances, you might want to consider taking out a joint account in which both you and your spouse make contributions. You can take advantage of the tax advantages associated with putting more money into a savings plan by taking advantage of lifetime or pay as you go life insurance policy premiums that save you money on premiums and also build cash value. Combined with your current life insurance policy premiums, these cash-value investments can provide a higher amount of cash down the road, should you die unexpectedly.
Your decision about Life Insurance and your overall strategy should be based on your specific needs and goals. If you want to replace income when you pass away, you need to look at Life Insurance options that will allow you to do that. Your choices include permanent coverage and term coverage. Term Life Insurance is designed to provide coverage for a particular period of time, such as a single year or up to 30 years. With a permanent plan, you simply need to reach the age of 65 before you can start receiving benefits. With a term policy, the premiums will have less of a tax advantage.
Some people prefer to take advantage of their tax advantage by purchasing universal life insurance policies that offer cash value. Universal Life Insurance is a type of permanent life insurance policies provide the same benefits and features as traditional permanent life insurance policies do, but they cost less than permanent policies due to the fact that they don’t require you to make monthly premium payments. However, they also lack certain features such as having a guaranteed death benefit and some health insurance companies don’t offer it.
For people who are interested in replacing income but don’t want to spend as much as they would for term life insurance policies, a universal or fixed income plan might be a good choice. You can build cash value on your policies by saving for them, which can either be done tax-free or by borrowing against the cash value. Many companies that offer universal or fixed income plans also have investments in programs that allow you to invest for growth purposes. They also have investment alternatives that offer flexibility, such as using stock options or mutual funds.
People choose to buy life insurance because they fear that they may someday have to pay taxes on the death benefits they receive. When the insured person has a long life, the death benefit can be quite large, which can translate into a significant amount of money for the beneficiary. If the insured dies before the death benefits are paid, the surviving spouse will not have to pay any of the taxes. But if the insured does not die until the payee is older, the surviving spouse must pay his or her share of the taxes. And since life insurance is part of the income of the insured, the person who receives the death benefit will also be taxed on the amount of the benefit.
To find life insurance coverage that is right for you and your family at a price that you can afford, do some shopping online. You can visit different websites that sell insurance and get life quote information from there. When you find a good package, make sure you read everything carefully and understand what it means. And remember, some policies are more affordable than others. Shop around and compare life insurance quotes so you can find the best deal possible.
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