Life insurance is a financial tool that will offer protection to your dependents when you die. But it can also be used as an investment vehicle to pay off your existing debts.
Apart from providing a lump sum of cash for your beneficiaries when you pass away, there are some other interesting ways to use your life insurance policy.
Prepare for Retirement
You might not be fond of the idea of taking out life insurance on your parents, so you’ll have enough money to get through your retirement, when they pass away. If you’re willing to try this, you’ll need to get the policy when your parents are 60, and you’re about 30 years old. The cost of the premiums will decline when your parents are 80 – by this time you’ll be closer to your own retirement.
Pay off Debts
The tax benefit is a key selling point for life insurance. Your beneficiaries will get a tax-free payout that they can use to pay estate taxes. Ideally, this should be on a separate policy setup up strictly for the purpose for paying off estate taxes and other debt. Without this policy, your family will be left with the burden of paying off your estate’s bill. Read More