You may want to consider adding life insurance to your financial plan if you want to provide a safety net for your loved ones if you die. The payout from the life insurance policy can be used to cover final expenses, daily expenses, and pay for outstanding debts. Whether a life insurance policy is the right choice for you or not will depend on your needs.
In some cases, life insurance can make all the difference to your loved ones. Here are the things you need to know to determine if a life insurance policy is worth it.
Is Life Insurance Worth It?
Life insurance may be worth the investment if you have dependents. The policy gives you the peace of mind of knowing that your loved ones who depend on you will be taken care of when you die. If you don’t have people that depend on you, there are still conditions where it is worth it; you just have to do some calculations to ensure it gives you the value for the money.
For instance, you can purchase a permanent life insurance policy and use it as part of a tax-deferral financial plan that is designed to help you evade paying taxes on your savings until you drop into a lower tax bracket, which is usually the period when you retire. While plans like 401(k) plans and IRAs can help do this, a permanent life insurance policy can help protect your money when you have maxed out your investment with these plans.
Alternatives to Life Insurance
You may want to skip on a life insurance policy if you don’t have dependents and don’t have the need to provide financial security to anyone else in the event of your death. But even then, getting life insurance could depend on your financial goals. For instance, you may have always wanted to award a scholarship for needy students in your community. Even if you are not responsible for anyone financially, there may be reasons to buy a life insurance policy.
Life insurance may allow you to leave a donation for a worthy cause. But there are other options for saving that may be suitable for your situation. Those comfortable with risk and are stock-savvy may opt for the stock market. If you are not stock-savvy, a mutual fund or other vehicles can help you invest your money.
When Should You Consider Purchasing Life Insurance?
Many people make the mistake of assuming that they don’t need to purchase life insurance because they are still young. While the chances of something happening are lower when you are younger, that doesn’t mean you are out of the woods. It is recommended that you get a policy when you are young because the costs are usually lower for younger consumers. One of the major things to consider when weighing your options is the impact your untimely death would have on your dependents. Will your loved ones have enough money to support themselves if you die?
If you’d like to learn more about life insurance policies and how they can help protect your loved ones, Redwood Agency Group is here to help. Contact us today to get started!