Ways life insurance can grow and protect your wealth.

Covid 19 pandemic occurrence happened in part to remind us of our own mortality and the need to protect our loved ones. While the pandemic has come and gone, it’s important to keep sight of the wide range of benefits life insurance can bring.

If you do not already have a life insurance or its been a while since you last reviewed your life insurance strategy, this may just be the right time to refresh things up.

Here are some factors to consider and keep in mind.

1. Life insurance provides financial security to your loved ones.

The primary goal of life insurance is to provide for and protect those who matter to you following your death, while the thought of death is an emotional topic, planning for unexpected events in life is crucial if you have a spouse, children and other loved ones who depend on your earned income.

A death benefit payout from life insurance can supply the needed essential cash flow to augment lost earned income, thereby helping your living beneficiaries maintain their standard of living which you planned for them.

• Life insurance can help fund financial goals while you are still living

Whether its starting a new business, embarking on a passion project or paying for a child or grandchild education, the cash value accumulated within an life insurance can provide the financial resources required to turn these dreams into reality.

Life insurance is structured in such a way as to provide liquidity necessary to finance major financial goals. It’s possible your circumstances change over time but life insurance offers you the potential to accumulate cash value which can be borrowed against while you are still living.

• Life insurance can cover long term care expenses

A life insurance policy with long term care provisions offer a predictable stream of income you and your spouses can access to fund care.

Many policies offer options that allow policyholders to access a portion of their death benefits while still alive to cover chronic care expenses, while upon death, any unused benefit is inherited by your beneficiaries.

• Life insurance can help preserve your legacy

Your wealth could provide three distinct benefits when using life insurance policy.

• Increasing your gifts to heirs.

Death benefits transfers income tax free to beneficiaries. It simply implies you can give greater after tax inheritance through your life insurance policy than through other asset classes.

• Tax advantage

Assets held in stocks, bonds, mutual funds and other vehicles generate taxable income and may taxed each year, or when you realize and access the cash equivalent of your holdings.

However if you redistribute a portion of the asset in a life insurance policy, you have an opportunity to potentially reduce you’re your accrued on going taxation.

• Creating new wealth

The cash value in a life insurance policy grows tax deferred; comparable to cash held in a bank account that it is taxed both VAT and WHT.

This tax treatment of cash allows you the opportunity to grow your assets over time thereby creating potentially new wealth to your heirs.

Take Away

Life insurance is personal to you as an individual and your strategy for leveraging your policy can change over time. Always consult an insurance expert and tax consultant for guidance on the best insurance policy for your circumstances.