Welcome back to the Successful Financial Strategies blog! On our blog, you can find answers to questions about your financial future and information that can help you better understand profitable investment tools and financial strategies. Keep reading our blog to learn a few more ways that life insurance can benefit you and your family in the future. If you are just joining us, be sure to check out parts one and two. Keep reading to learn more about life insurance, or contact our financial advisors in Henderson and Arden for financial planning services and to learn how life insurance can fit your specific goals for your future.
To Pay Off Estate Taxes
In some states, when a person dies their family may be required to pay an estate tax, and the amount of taxes that must be paid can be overwhelming. North Carolina does not impose an inheritance tax, but if you have property in another state that does, then your family may be required to pay estate taxes. Your beneficiary may have to pay federal taxes on your estate; the IRS states “The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interest in at the date of death. Yes, even in death, the government gets a cut.”
Replace Breadwinner’s Income
Life insurance may also be used as a substitute for your income if you are the main breadwinner of your family. This provision can guarantee that your family will be taken care of after you pass away and that their quality of life won’t have to be sacrificed. However, even if you aren’t the main breadwinner, it might be a good idea to make a provision in case you die. Why? There will still be costs associated with your death. For example, if you are the main spouse tasked with taking care of the kids, doing laundry, and other household tasks, it might be a good idea to provide your partner with some income to cover possible child care costs and other related costs that they may need if they no longer have your help.
Fill in the Gaps During Your Life
Life insurance can fit a variety of financial needs and many of those needs are for your family after you pass. However, life insurance can offer benefits to you during your life depending on the type of policy that you invest in. One of those benefits is filling in the financial gaps with a permanent life insurance policy’s cash value. If you have accumulated enough cash value, you can withdraw it to help pay for big expenses. You can also use the death benefit to pay for your life insurance premiums; this is called “paid up.” The cash value of your life insurance policy can also be utilized as a loan, or to supplement your retirement income. However, you need to be careful because, in some cases, as you withdraw the cash value of your policy, the amount of your policy’s death benefit decreases, and sometimes decreases significantly. It’s always best to discuss your options with a financial advisor first, and to fully understand the benefits of your specific policy.
To better understand your policy and the opportunities that it provides, contact Successful Financial Strategies for life insurance planning services!