Permanent Life Insurance - The Benefits Of Starting Young
Updated: May 15, 2020
When most people think of life insurance they think of elderly widows sitting in a dark room. There is a belief that life insurance is only something that older people need to worry about and even then it’s not really a necessity. Due to this belief, we feel that many people are missing out on an amazing opportunity.
Today we want to focus on one of the forgotten tools for young people looking to build a financially stable future: permanent life insurance.
What is permanent life insurance?
Permanent life insurance is an umbrella term to describe any life insurance policy that does not expire.
If you’re not familiar with the concept of life insurance, it’s simply a contract between an insurer and a policyholder. The policyholder pays the insurer so that if the policyholder dies then the insurer will guarantee payment to the beneficiaries of the policyholder.
The two main types of permanent life insurance are:
Whole life - Offers coverage for the entire lifetime of the policy owner and its savings can grow at a guaranteed rate.
Universal life - Offers a savings element in addition to a death benefit, but offers different types of premium structures and earns based on market performance.
How does it help you?
Life insurance is valuable because it provides financial security to people that depend on you in the event that something happens to you. Additionally, one of the major benefits of a life insurance policy is the ability to make withdrawals on a tax-free basis. This means that you can withdraw cash from your policy without having to worry about paying tax on it!
Here are a few examples of people who would be interested in buying life insurance:
1. Parents with children - If something happens to you, not only will your children be taken care of but they won’t be a burden on friends or other family members.
2. Young adults whose parents incurred student loan debt - You may be on the hook to repay student loan debt in the case of your parents’ death.
Why should you start young?
At some point, it is going to be a good idea for you to purchase life insurance. What many younger people don’t realize is that they have an amazing advantage over others. Insurance brokerage’s base their premiums off of information like this: ● Are you healthy? ● Do you have any addictions or family history of illness? ● How many more years are you expected to live?
This means that the younger and healthier you are, the less you have to pay. Since you’ll inevitably need life insurance, it makes a lot of sense to start while you’re young and locks in a lower rate.
How do I start?
One of the most popular forms of life insurance for younger people is Indexed Universal Life (IUL) Insurance. These are essentially a hybrid between a retirement account and a life insurance policy.
IUL insurance policies offer tax-deferred cash accumulation for retirement while also offering a death benefit. If you want to take advantage of possible cash accumulation but also need permanent life insurance protection then this option is for you.
I hope that you found this article valuable! If you think that you’re interested in purchasing life insurance then feel free to book an appointment and I’d be happy to speak with you. If you’re interested in learning more please schedule an appointment using the "schedule an appointment" button below.
The cost and availability of life insurance depends on such factors as age, health, and the type, and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved prior to cancelling or changing an existing one. Accessing the cash value tax-free a life insurance policy involves borrowing cash through loans. These loans are charged interest and reduce the death benefit and cash value of the policy. If a policy lapses or is surrendered with an outstanding loan, a portion may be taxed as a distribution. The death benefit and cash value of variable life insurance will fluctuate based on performance of the investment options. These types of insurance policies are sold by prospectus. Please consider the investment risks, charges, and expenses before investing. (PROSPECTUS LANGUAGE) Death benefits are subject to the claims paying ability of the issuing insurance company. Guarantees are subject to the claims paying ability of the issuing insurance company