Most people know that life insurance provides a financial safety net for their loved ones in the event of their death. However, life insurance can also be used to help individuals and families while they are still alive. Bill Schantz of Mid Atlantic Financial, LLC will now explain some of the benefits of life insurance for policyholders.
How Life Insurance Can Benefit its Policyholders
Cash Value Accumulation
According to Bill Schantz, many life insurance policies have a cash value component that allows the policyholder to accumulate funds over time. This cash value can be accessed through loans or withdrawals, providing needed funds in times of financial hardship.
Moreover, the cash value is often used as collateral for loans, providing a lower interest rate than would be available without the life insurance policy.
Policy Loans and Withdrawals are not Taxed as Income
Withdrawals and loans from a life insurance policy are not considered taxable income. This means that policyholders can access the cash value of their life insurance policies without having to pay taxes on the money they receive.
Because of this, life insurance is an extremely attractive option for those who are looking for a way to access extra funds without having to pay taxes on the money they receive.
Coverage for Health-Related Expenses
Life insurance is often used to cover health-related expenses, such as long-term care costs. This is especially beneficial for those who do not have health insurance or who are underinsured. By using life insurance to pay for these expenses, policyholders can protect their assets and avoid going into debt to pay for their care.
Paying Off Debt
Many people use life insurance to pay off debts, such as mortgages, credit cards, and car loans. This can be especially helpful for families who would otherwise be burdened with these debts in the event of the policyholder’s death. By using life insurance to pay off these debts, families can focus on other expenses and financial goals without having to worry about repaying debt.
Supplement Your Retirement Savings
Many people use life insurance to supplement their retirement savings. Bill Schantz believes that by using life insurance to create a “tax-free” income stream in retirement, policyholders can increase the amount of money they have available to them during this time. Hence, life insurance is a valuable tool for those who are looking to secure their financial future.
As you can see, there are many benefits that come with having a life insurance policy. If you are looking for a way to provide financial security for your loved ones, or if you want to create a safety net for yourself, life insurance may be the right option for you.
Of course, the primary benefit of life insurance is the death benefit. People often use this money for final expenses, such as funeral costs and outstanding debts. The death benefit can also be used to replace lost income or to provide financial support for dependents. In some cases, the death benefit may be subject to estate taxes, but this will depend on the individual circumstances.
If you are thinking about purchasing life insurance, it is important to know the potential benefits that come with coverage. Bill Schantz has explained how beneficial it can be. A life insurance policy can provide financial protection and mental peace not only for your loved ones but also for yourself.