Why Buy Life Insurance During Unsettled Economic Times?

Posted on 7-18-2023

This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article discussing four good reasons why life insurance can be especially helpful in a challenging economy:

To say the economy has been uneven over the past few years is an understatement. Amid these bumpy economic times, why buy life insurance?  Here are a few reasons…

Protection for Loved Ones

Savings that were intended to provide support for you and your family may have taken a hit over the past few years due to stock market volatility. If you die, life insurance can be used to replace some of the savings you may have lost during these turbulent economic times.

The tax-free death benefit could be used to provide income to your spouse and family, pay off mortgages and loans, meet tax liabilities, or pay for college expenses.

May Help Diversify Your Portfolio

Certain types of permanent life insurance have a cash value option that can be beneficial during times of economic uncertainty. Some policies offer minimum interest rate guarantees (subject to the financial strength and claims-paying ability of the issuer), that may offer an alternative to the unpredictability of the stock market.

Offers an Additional Way to Accumulate Wealth

Cash value life insurance allows all interest and earnings on the policy’s accumulations to grow tax deferred. You may be able to take withdrawals from the cash accumulation of the life insurance policy. Any withdrawal you take will typically be tax-free up to your basis (i.e., premiums paid) in the policy. Because any earnings grow tax deferred while inside the policy, they will be subject to income tax when you withdraw them. Withdrawals coming out of your policy are generally treated as basis first.

Be aware that surrender charges may also apply when you withdraw from your policy, even if you withdraw only up to your basis. One way to avoid this and still access your money is to take…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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