Getting married, buying a home and starting a family are just a few of the milestones in life. However, these milestones also mean assuming more responsibility, especially if, like me, you’re a provider for your family. When financial planning became more complicated than making sure I had enough money for gas and movies on the weekends, I realized that I needed to consider my options carefully.
The truth is, these days I can’t afford to miss an opportunity to invest wisely in preparation for life’s emergencies. In addition, I also want the assurance that if something were to unexpectedly happen to me, my family will be well taken care of…a standard, I think it’s safe to say, we all want.
Although some financial advisers suggest a combination of a term life insurance policy and long-term investments to provide financial protection, a growing number of family providers are choosing permanent life insurance policies as a smart alternative. Some policies exist that are designed to give me access to my policy’s cash value as it builds over time…while always providing lifelong protection, just so long as I pay my premiums on time. Of course, loans and withdrawals reduce the cash value and death benefit.
Despite experts’ advice to invest, I know of many young couples who spend their money on such unexciting expenses as college loans, mortgage payments or home improvement projects. Additionally, for healthy young parents and professionals, paying off a term life insurance policy without ever using it probably isn’t perceived as ‘fun’ as other ways to spend money.. And in this scenario, letting a term life insurance policy run out means shopping for a new policy at a more advanced age. This can be an expensive route at a time when life insurance may be a necessity. Many people purchase life insurance when they get married or have a child, but that could mean that the 20 year term policy could be running out right when the children start college.
Now imagine having a permanent life insurance policy that gives access to its cash value while it accumulates – tax-deferred – over time. For most people, the opportunity to have the safety net of a life insurance policy with the access to cash value should you need it, yet without term expiration, makes a lot of sense. Again, loans and withdrawals reduce the cash value and death benefit.
For me and a growing number of investors, the idea of life insurance as merely a death benefit is a thing of the past. Today, a permanent life insurance policy can give me both the peace of mind knowing my loved ones will be protected and access to cash value that has built up inside the policy. It’s also important that a financial professional be consulted before withdrawing money from a permanent life policy.
Making withdrawals or taking out a loan when other resources are insufficient to cover expenses like college tuition or a down payment on a home might be an option: cash value should not be perceived as a personal ATM to use when you need some cash. Taking loans and withdrawals reduces the cash value and death benefit. It can be a delicate balance to make sure there is enough to borrow while still keeping the policy in force. As more investment experts are realizing, purchasing permanent life insurance while investors are young and healthy simply means good financial planning. The last thing any of us want is to be forced to shop for life insurance when we’re older and possibly suffering from health problems. By considering the investment benefits of permanent life insurance early on, you will help protect your family in multiple ways in the long run. And there’s really no substitute for a policy that gives me that kind of peace of mind.