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Alternative Uses Of Life Insurance You May Not Know About


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The primary goal of a life insurance policy is to provide financial support to the deceased’s family after the client’s death.


However, it’s important to remember that life insurance can also be used as a multipurpose financial tool, allowing you to control a variety of solutions to common problems.


  1. Pay Less In Taxes

Taxes are an unavoidable part of life. Many of us do not want to pay any more taxes than is absolutely necessary. Life insurance provides tax advantages.


When you die, your beneficiaries will receive a tax-free death benefit from both term and permanent policies. You can take tax-free loans from the cash value of your permanent policy while you’re still alive.


  1. Equalizing Inheritances

Most of us would prefer to leave an equal inheritance to each of our heirs in an ideal world.

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In most cases, it can be difficult for more than one person to share an inherited home or business. Life insurance can help with this issue by allowing you to give the value of an asset — in cash — to one heir while leaving the asset itself to another.


  1. Leaving A Legacy

You can use your life insurance value to pay for charitable contributions as a tax-free source of funds, allowing you to have a long-term impact on an important cause.


  1. Protecting Your Business

You have a lot to protect as a business owner: your company, your employees, and your family. If one of your partners or key employees dies or becomes disabled, the impact on your business should be as minimal as possible. You should also strive to attract and retain top talent.


When a partner or key employee dies, permanent life insurance can help the business continue. It can also aid in the transfer of business ownership in the event of your or a partner’s retirement, disability, or death—all without depleting the business’s funds.


Non-qualified retirement plans can be funded with permanent life insurance. Term policies can also be used to protect your company.


  1. Access To Funds In Case You Get Sick

People are living longer lives than they ever have before. It’s critical to consider how you’ll get the extra money you’ll need to care for yourself if you develop a chronic or terminal illness. Permanent life insurance can be beneficial.


In addition to tax-favored access to cash value:

  1. many policies include an optional, extra provision known as a rider
  2. that allows you to accelerate the death benefit while you are still alive. The funds can be used for any purpose.


  1. Accessing Loans

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We frequently regard taxes as an unavoidable part of life. However, life insurance is one of the few products that can help you avoid paying certain taxes.


Many life insurance policies provide owners with a tax-free solution to their financial needs upon the insured-death.


Furthermore, while the client is still alive, tax-free loans from the cash value of a policy are sometimes possible.


When the client purchases a life insurance policy, he or she can start building up “cash value.” The amount can be accessed through loans and withdrawals in certain circumstances.


Though the client should expect to pay interest on these loans, just as they would on a traditional bank loan, the client will not be required to pay taxes on the money you receive.