Buying life insurance at a young age can save you money over time. As we live in the 21st century, it is important to diversify our investments at an early age. It would be a wise decision to learn why many people are keen to purchase life insurance in their 20s or early 30s, even if they don’t think you need it yet.
When you’re considering life insurance, you’re likely to have lots of questions. Why do I need life insurance if I don’t have a family? Am I too young to purchase a policy? Can I afford it? What kind of policy is right for me?
As you’re weighing the pros and cons of different types of life insurance policies, you’re likely to consider permanent life insurance. What is it? And what are the benefits of this type of policy?
Here are six advantages of permanent life insurance that you should know about.
1. IT’S A PERSONAL ASSET
Permanent life insurance builds up a cash value over time as you pay your premiums. Even better, depending on your policy, that cash value could grow to a substantial amount in the future. More importantly, it won’t decline if the market changes. However, should an emergency arise, you can use the cash value throughout your life. For example, you could pay off your student loans, save for retirement, or just for a rainy day.
2. LET YOUR COVERAGE GROW
With this type of policy, you have the option of increasing your coverage through the dividends that you gained. Getting more coverage without paying more is ideal. You don’t need to increase your payment amounts or make any future premium payments to obtain this additional coverage.
3. BORROW AGAINST YOUR POLICY
You can take a loan on the cash value of a life insurance policy without needing to go through a credit check; however, any unpaid balance will subtract from the death benefit. In this scenario, it’s important to balance your current needs against your long-term goals.
Potential uses for a loan taken out against a life insurance policy include paying off a home mortgage, covering a child’s college tuition, or taking a vacation. You’ll be charged interest on the loan, usually in the range of 5% to 6%. If the loan and interest aren’t paid before you die, the loan balance and the fees will be deducted from the death benefit.
4. WITHDRAW FROM YOUR POLICY’S CASH VALUE
If you are at a moment in your life when you need to access funds and don’t want to touch your savings, your permanent life insurance is an option.
Generally, you can withdraw money from the policy on a tax-free basis but only up to the amount that is available for you at that time. Withdrawing some of the money will keep your policy intact. Withdrawing all of the money will cancel the policy.
5. IT WILL PAY A DEATH BENEFIT
This is one of the key benefits of a permanent life insurance policy. As long as you stay current on your policy and pay your premiums, your policy will always pay a death benefit someday.
6. IT’S NEVER TOO SOON TO START
In fact, being young and healthy has its advantages when it comes to life insurance. Your payments are usually lower. If you get life insurance now and develop health issues later in life, you’re already covered. You have more time to grow the value of your policy, depending on its face value.
The important thing is to choose the right life insurance for your budget and needs. Over the years, your needs, your family situation, and your life goals will evolve. When that happens, it will be time to reevaluate the type of insurance you own to ensure that you are properly covered.
Remember that you are never too young to buy life insurance, since the younger you are, the lower your premium will cost. If you start building your net worth at an early age, you will surely thank yourself in the future. And a reliable Life Insurance Sales Agent is there to provide guidance during this process, based on your situation and your goals.
For more information, call Jessica Maiato at Freisenbruch Meyer today at 294-4618.
75 Front Street, Hamilton