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The Benefits of Life Insurance



The Benefits of Life Insurance

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Life insurance is an important contract that is often overlooked by many. This agreement plays a critical part in helping you establish a secure financial plan for your family’s future. If you are no longer there to provide for your family, life insurance will aid your family financially long after your death.

According to a 2021 survey, half of the American population has never applied for life insurance. Another survey deduced that people believe a $250,000 life insurance quote for a 30-year person is $1000. Instead, it is only $160 per year.

This guide shall talk about life insurance and how you and your family can benefit from a life insurance policy. Keep reading to clear any misconceptions so that you can benefit through an insurance plan.

What Is Life Insurance?

Life insurance is an agreement between an insurance company and the insured person. This agreement states that the insurance company will pay a specific amount to a beneficiary after the insured person’s demise. The person getting insurance picks their beneficiary or beneficiaries while applying for the life insurance policy. The amount the insurance company shall pay, payments for major illnesses, and other factors are considered before the finalized agreement.

Types of Life Insurance

Whole Life Insurance

Whole life insurance, also called traditional life insurance, helps offer permanent death benefits to the beneficiary after an insured person’s demise. Whole life insurance offers a savings module that can help bring in cash benefits. However, you will have to pay a fixed rate of interest.

Universal Life Insurance

Universal life insurance is a policy that is offered in the United States. The contract states that premium payments that rise above the insurance cost are added to the policy amount. It is credited every month after the application of interest.

Variable Life Insurance

This insurance is a fixed or permanent life insurance policy. Variable life insurance comes with a cash account divided into sub-accounts. These smaller accounts are mutual funds that sometimes offer multiple features.

5 Advantages of Life Insurance

No Tax, No Tension

If an insured person passes away tragically while their coverage was still in effect, their beneficiary gets a death benefit amount. This amount does not need to be filed for tax returns, as the death sum is not considered part of income.

A tax-free sum is beneficial for family members as they can use the amount completely. Using a part of your income to pay tax can bring financial trouble to some families. A life insurance policy provides added benefits to aid your family fully after your death.

Secure Family Future

Most insurance companies offer clients a life insurance policy that exceeds their income. Insurance companies will suggest an amount that is seven to 10 times the product of your yearly income. The life insurance policy will easily cover significant expenses, living costs, and even education. Your kids will be able to study without worrying about college, high school, or university expenses and student loans.

Coverage of Funeral Costs

The average cost of a burial ceremony costs $7,848 in 2021. Since funerals are costly, most people could use a helping hand. A good life insurance policy allows a beneficiary to pay for burial costs and other expenses using the amount obtained from the contract. They will not have to ask for loans and will not have to cover costs by paying from their pocket.

Most insurance companies do have final expense plans. You could also opt for these if you are worried about the financial burden of a burial. Insurance companies offer low-cost plans and cheap monthly buckets to help you insure your funeral.

An Aid for Chronic Sickness

A life insurance policy does not always necessarily come into effect after a person’s death or tragic demise; it may also apply if the insured person becomes terribly ill. These plans are known as riders. Riders are endorsements that can be used to upgrade a basic life insurance policy for better coverage.

The accelerated benefits rider allows the insured person or beneficiary to avail death benefits. However, these are only applicable under specific circumstances or conditions defined beforehand.

If a person has less than a year to live due to cancer or other chronic conditions, they can benefit from the death sum. It allows the person to pay for the life insurance policy while getting treatment using its benefits.

An Alternative to Retirement Savings

Opting for a variable or universal life insurance policy or even a whole one helps the insured person become eligible for an added amount apart from the death benefit. This added cash amount or benefit will build up and can eventually be used to pay off car loans or home loans. Alternatively, you can also use it to purchase a property or vehicle.

People often use this sum as a retirement fund or as an amount to make a few down payments.
No matter what you choose to do with this amount, it is undoubtedly a great help. You will not have to save up for other expenses or your retirement separately as the added cash benefit will have you covered.

Note that a life insurance policy should never be an alternative to a 401K or an IRA. Plus, a cash value life insurance is not only more costly than term life insurance, but it also does not provide added benefits.


A life insurance policy is meant to financially protect people and help provide a stable future to the insured person’s family. If you are worried about your loved ones and fear what will become of them after your death, you must consider a good life insurance policy.

Do your research regarding the kind of insurance policy that suits you, suitable companies, a reasonable return, and other benefits. This will help you ensure a peaceful future for your loved ones.

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