Surprising Uses Of Life Insurance That You Didn’t Know About

No one can question the benefits and importance of having a life insurance policy. The effectiveness of any policy relies on how they are used for solving or addressing different financial issues. There are many life insurance types to choose from, but if they do not cater to your specific needs, they are not worth investing in. The obvious reasons are known by most people, but there can be a few surprise uses of life insurance.

Let us look at two such scenarios where life insurance can create compelling opportunities. It is important that you stay open-minded for considering these options.

1. Annuity Legacy Maximization

There are a large number of retirees who own annuities that they will not need for their retirement income. While most choose to leave the annuities for their kids, there are other strategies you may consider to use that money. It is possible to use the value of the annuity to create a larger inheritance for your kids, grandkids or charities if you are interested.

If the owner of the annuity is qualified for life insurance, they can consider annuitizing their income and use it to pay annual premiums for life insurance. Though the new income from the annuity is taxable to its owner, the death benefits from the life insurance will be quite significant and tax-free to the beneficiaries. Discuss with a professional on how to use this strategy efficiently so that you can create tax-advantaged wealth by using an under-utilized annuity and a properly designed life insurance policy.

2. Family Legacy Planning

There is a stark difference in how different generations plan their retirement. The older generations had the cushion of a company pension and a solid Social Security, while the millennial generation might not necessarily enjoy the same benefits. So, the retirees are considering other options to provide an inheritance to their next generation or two.

This is not a conventional strategy and may sound morose initially, so it is important to keep an open mind here. The grandparents/retirees may offer their kids to pay life insurance policies on their life. In fact, they can divert some portion of their 401K or IRA contributions to their life insurance policy premiums. This way they benefit from leveraging the tax-free nature of the life insurance policy and fund a part of their retirement while minimizing their risks at the same time. In other words, the beneficiaries receive an enhanced inheritance by leveraging the life insurance. Since it is an unconventional approach, it is advisable that the concerned family members discuss this further before taking a final decision.

You can use life insurance as leverage, and it is tax-efficient as well as flexible. These elements are responsible for designing different solutions that may not be obvious readily. At LifeCentra, we help you understand such scenarios and help you take advantage of different benefits of life insurance. Don’t just take insurance because everyone told you to do so or because everyone is doing it. Keep in mind that investing in any kind of life insurance type will reward you in ways you might not have even imagined. So, make an appointment with us soon and choose the plan that best suits your needs.