Life insurance policies provide a variety of benefits. These insurance products help secure a financial future for your loved ones when you pass away, but they can also provide benefit to you during your lifetime.
When searching for the right policy, you need to understand the general benefits of life insurance as well as the specific benefits of life insurance Ohio residents can enjoy.
Here are some of the main benefits of life insurance.
Give Surviving Family Members an Inheritance
Providing financial benefits to your family members is one of the most significant benefits of life insurance.
A life insurance policy can ensure your loved ones have something to inherit from you when you die. The death benefits get paid out when you pass away, and you can choose one beneficiary or multiple heirs.
Pay Funeral and Burial Expenses.
If you do not want to rely on your loved ones to pay for your funeral and burial costs, a life insurance policy can help with these expenses. You can even specify which costs to cover so that your beneficiaries do not have to spend their inheritance on your funeral costs.
Pay Taxes or Cover Inheritance Costs.
Depending on specific state laws, your heirs may need to pay an inheritance tax or an estate tax. Depending on the value of your estate, you may also have to pay federal estate taxes.
Your life insurance benefits may partially or entirely offset the cost of these taxes. They can also cover any other incidental estate and inheritance expenses, such as legal fees.
Before you add inheritance expenses to your life insurance policy, however, you need to make sure to consult your insurance advisor. This expert can help you find out exactly how estate and inheritance taxes and costs can affect your beneficiaries.
As for regular taxes, if you buy a cash-value life insurance policy, any interest the account earns won’t be counted for income tax purposes.
You can consult with a tax advisor to find out what life insurance benefits Ohio residents can expect when it comes to taxes.
Help Surviving Family Members Pay Off Debts
If you have debts from a mortgage, credit cards, or business loans, your beneficiaries will have to pay for them if you pass away.
The last thing you want is for your family members to be left with the burden of the debt when you are gone.
To avoid having your loved ones get stuck with mortgage or loan payments, you can take out a life insurance policy that provides death benefits that can cover your debt payments.
You Can Use Your Insurance When You Are Alive
Life insurance riders, which are customized details you add to your life insurance policy, can allow you to use your life insurance while you are still alive.
For example, a disability income rider provides you with benefits if you have a disability or injury and are unable to work. A long-term-care rider allows you to take some money out of your insurance policy to pay for a nursing home or another form of long-term care.
In What Situations Should You Buy Life Insurance?
Here are some situations where getting life insurance would be a good idea:
When You’re a Young Adult
Life insurance is a good idea when you’re a young and single adult. It can pay for your funeral costs if you die unexpectedly. Also, you may be able to use it to support an elderly relative that may need special care.
The good news is that life insurance policies are quite cheap for young, healthy individuals.
When You Have a Young Family
If you’re thinking of starting a family, you may want to secure lower life insurance rates. The rates get higher as you age, and you will have less disposable income when you’re older, and as your family grows.
When You Have an Established Family
Life insurance is also essential when you have a family with multiple dependants. Insurance coverage is necessary for a person working outside the home, and you can also get benefits for a homemaker or someone who works inside the house.
To Cover Your Business Obligations
If you own a business alone or have partnered with others, you can consider getting a life insurance policy that will cover your business obligations. Such coverage can help you provide benefits for employees and pay off business debts.
To Protect and Build Your Wealth.
Life insurance is an excellent way to secure a lifestyle for your loved ones. Another benefit of life insurance Ohio residents can enjoy is tax advantages through life insurance policies. An insurance expert can help you set up a plan to protect more of your assets from taxes so that you can give more to your beneficiaries.
What Are the Disadvantages of Life Insurance?
- If you surrender the policy, you may not be able to recover the entire premium paid.
- You forego current expenditure every time you pay a policy premium.
- More often than not, the life insurance policy is for the benefit of others rather than you.
- It isn’t easy to decide to find the right policy on your own. You need the help of a competent insurance advisor.
Term Life Insurance Versus Whole Life Insurance
When shopping for a policy, you need to understand the two main types of life insurance.
Term life insurance doesn’t last your entire life. Instead, it lasts for a specific amount of time. The most common terms for term life insurance are 10, 20, and 30 years.
You choose the term when you take out the policy. Term life insurance is typically the cheapest type of coverage, and you can convert it to whole life insurance later if you want.
The two most significant drawbacks of term life insurance are that it ends and that it doesn’t have a cash value. However, the cheaper premiums make it very accessible.
Whole life insurance lasts for your entire life, and it has an accumulating cash value, which gets paid out either to your beneficiaries when you die or to you if you live past the age of 100.
Unfortunately, whole life insurance is costly as you have to pay fixed premiums for your entire life. It can also come at a high cost if you surrender and cash out (cash value) because you won’t get the full amount of your premiums back.
Of course, navigating life insurance is understandably complicated. Reach out to a local Ohio advisor for more personalized advice and guidance.