What's Happening?
Life insurance is often perceived as a financial safety net for beneficiaries after the policyholder's death. However, recent insights reveal that life insurance can provide significant financial advantages while the policyholder is still alive. According to a survey by Corebridge Financial, 47% of Americans with life insurance feel confident that their dependents would manage financially without them, compared to 28% without insurance. Life insurance policies, particularly those with cash value components, offer benefits such as tax-deferred growth, loan options, and creditor protection. These policies can supplement retirement income, provide tax advantages, and cover unexpected health events. The cash value in permanent life insurance policies grows without annual taxation, unlike traditional retirement accounts. Additionally, policyholders can take loans against their cash value without triggering taxable income, allowing continued growth of the cash value even when borrowed against.
Why It's Important?
The financial benefits of life insurance policies extend beyond the traditional death benefit, offering policyholders tools for effective personal financial management. These policies can provide liquidity, tax advantages, and protection from creditors, making them versatile financial instruments. As Americans face increasing financial pressures, understanding the full scope of life insurance benefits can aid in better financial planning and security. The ability to access funds through loans without tax implications can be particularly advantageous, offering a lower effective cost compared to external debt. This understanding can lead to more informed decisions about financial products and strategies, potentially improving financial stability for individuals and families.
