The Importance of Life Insurance

Posted October 4, 2021

Life Insurance is among the more critical components of your insurance portfolio.  Upon your death it provides financial protection for your family.  This includes replacing lost income, paying off debt, and covering immediate, ongoing, and future expenses.  Life insurance can also provide a way to provide retirement funds or income to help cover medical expenses for a terminal illness.  The death benefit is almost always income tax free and has been for over a century of tax law.

In addition to providing a financial benefit there are psychological benefits to having this protection.  For yourself, you can sleep well at night knowing if anything happens you will continue to provide for your loved ones.  For your family, it reduces anxiety and stress at a very difficult time.

Death Benefit

All types of life insurance provide a death benefit.  This is paid out upon the death of the policyholder.  It can be used for anything. Common uses include:

  • Immediate: Funeral, medical, or legal expenses associated with the person dying.
  • Ongoing: Replaces income to pay for items like mortgage, utilities, groceries, and other ongoing expenses.
  • Future: Spouse’s retirement, or education for children/grandchildren.

Living Benefit

Certain types of life insurance policies also provide a living benefit.  These are typically tax advantaged loans or withdrawals of the cash value. People may use these funds to pay for medical expenses, long term care, terminal illness care, emergency funds or to fund that vacation home, round-the-world cruise, or any other use. There is no restriction to the use of the money you access and there are no loan applications required.  This can be a great and ultimately tax-free benefit that only requires understanding how it might impact other policy values.

Types of Life Insurance

  • Term Life Insurance – the simplest product requires the lowest cash flow. It provides a death benefit with the premium usually guaranteed for a set number of years before it increases annually.  Term life insurance is like renting a house.  You get the protection for a period of time but no equity.
  • Whole Life Insurance – provides a death benefit for life if the required premiums are paid. The policy may generate dividends which can be used to pay or reduce the premium, be paid out as cash, increase the death benefit, or create savings to be used later at tax advantaged terms.
  • Universal Life Insurance – is like whole life with more moving parts and fewer guarantees. It may provide more flexible premium options but may require additional, unplanned funding under some circumstances.

Choosing a Life Insurance Policy

As with most insurance policies, choosing the right one for your situation can be difficult.  If you just want to secure a simple term-life policy, we provide quick and easy online option at

For more complex situations, or if you just want to speak with someone first, David Kaplan provides our clients with sound, conservative advice and strategies with the goal to grow assets and protect cash flow so it is there when you need it.  Give him a call today to review your options at 857-255-0225 or simply Click Here to schedule a call!

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