We are all familiar with the main reasons we purchase Life Insurance. We want our family to be able to continue on with their current lifestyle in the event we die. We want our life insurance benefit pay out to replace our income, pay off debt, pay our funeral costs, pay off the mortgage, pay for our children’s college, and pay any estate taxes or other taxes due if we die. So we set up a meeting with our attorney, an estate planner or life insurance expert. We discuss our current expenditures, our debt, our income, our future expenses, our savings accounts, and our retirement accounts and plans. Then we come up with a decision on how much life insurance we want and what type of policy we need to accomplish our plan. Sometimes we take a simpler journey and just buy a policy for an amount your spouse wants. It is not a fun topic but life insurance is a responsible topic to consider.
However, here are some less morbid ways to use life insurance:
Adult children buy life insurance on their parents to fund their own retirement. This is more cost effective when your parents are in their early 60’s. This allows their parents to use their retirement income for themselves.
Grandparents who adore their grandkids will buy life insurance so they can pay for their grandchildren’s’ college educations or weddings.
You can buy life insurance so that you can leave an inheritance for those you love. People will carve out a portion of their retirement savings to buy a Life insurance policy and name their heirs as their beneficiaries, and then not feel guilty about spending their hard-earned retirement savings for their own enjoyment.
Many business partnerships buy life insurance on each partner equal to their share value of the business in case of death. By doing this, you don’t have to sell the business in order to pay the dead partner’s heirs for their share of the business. You also avoid having the spouse or other heir become your partner in lieu of not being able to pay them off.
Upon retiring, some people liquidate their assets and buy their dreamhouse in a favorite vacation spot. If they have 2 or more heirs, one may want the house and the other may want their inheritance in cash. Life insurance can be purchased in an amount equal to the house value for each heir who wants cash and the other heir can have the home, leaving everyone happy.
Many people want to be remembered after they pass on. Life insurance is a great way to leave a legacy donation to your college or a charity that you like.
September is Life Insurance Awareness Month! We hope we made you aware of some new ways to use life insurance. We also hope we made you aware of your current situation and your need to have life insurance in your plan. Feel free to contact us if you need more information or guidance.