GYST Sis: Why You Need Life Insurance *And* A Will
If 2020 has taught us anything, it’s that life is unpredictable and tomorrow is not promised. As much as we hate to think about it, all of us have an expiration date. Those we leave behind will not only be grieving, but will be tasked with wrapping up any unfinished business we may have. Two of the ways we can ease the burden for our loved ones are: 1-ensuring we purchase and maintain proper amounts of life insurance, and 2-creating a clear and concise will outlining our final wishes. These are the reasons you need both…
To Pay Any Medical Bills and/or Remaining Debts
In the event you are ill, or require hospitalization or hospice care before your passing, you may leave behind medical bills that need to be paid. You can outline this process in your will, but you can also potentially turn to your life insurance policy while you are still alive for assistance. If you are facing a terminal illness, some life insurance policies will let you use some of the cash benefit to pay your medical expenses.
Your will and life insurance policy will also help retire any debts that you leave behind. The major benefit here is that having a will removes ambiguity. Also, your will helps to organize your business and personal affairs for your executor, making their unenviable task that much easier.
To Assist With Funeral Costs and Estate Taxes
Another major use of life insurance policies is to help with funeral expenses. Whether or not you want to have a ceremony, there are certain costs associated with burial or cremation, and the funds from a life insurance policy or directives from your will can specify how this is to be carried out and what your wishes are for interment.
In addition to funeral expenses and personal debts left behind, your heirs will have to pay estate taxes on the inheritance you leave them. This can be covered through the use of funds from a life insurance policy, or you can designate how the estate taxes are to be paid in your will (either through the sale of a house or some other way that you specify).
Your Life Insurance Policy Can Grow In Cash Value, Lead to Diversity In Your Investment Portfolio, and Can Be Protected Assets During Financial Hardship
Just like investing in a 401K and IRA makes perfect sense for an employee saving up for retirement, so too, does having a life insurance policy, as it is considered part of the mix of investments an individual needs to have in order to prepare for later life. Unlike the stock market, life insurance policies are not subject to large fluctuations in value and, as such, provide a stable foundation for many retirees’ post-working life.
During life, you may encounter financial ups and downs that could result in personal bankruptcy. In this eventuality, some life insurance policies provide financial protection because they cannot be seized by creditors during a bankruptcy proceeding.
While most of us don’t plan on going bankrupt, having a life insurance policy that cannot be taken away by creditors adds an extra layer of security and peace of mind that will help you get through your ordeal.
Some life insurance policies build cash value over time. As with investment diversification, this is another way for people to accumulate assets while also providing security for their heirs. Used in conjunction with a will, these various financial instruments guarantee as smooth a transition as possible in the event of your passing and provide tangible and quantifiable ways to make certain that you have everything covered.
To Provide Security For Your Future
Just as some life insurance policies allow you to draw down on the value of the policy should you face a terminal illness, others can help provide you an annuity in retirement that will allow you to preserve your retirement savings and investments.
In the end, (no pun intended) maintaining life insurance and leaving a will are just two of the ways we can make sure the people we love are taken care of that will help save them time and trouble. There are multiple benefits to taking care of this ahead of time—aside from certainty about your plans and knowing how you want things to be handled when you are gone. Among other things, having a will and life insurance policy now means that you won’t have to make drastic decisions under pressure.
*As always, this information is provided for your consideration only, and should not be considered financial advice. We at FBW STRONGLY advise you to consult with a professional financial panner, life-insurance representative, attorney and/or tax consultant when planning your financial future.
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