The main goal of life insurance policy is to protect beneficiaries upon your death. However, you can use it as an investment vehicle, and help you settle your debts. Secure Senior Life Insurance (a life quote comparison website) recommends for level term policy to pay off debts for the senior citizens. The majority of the people purchase life insurance to protect their dependents in they die. This is the primary function of insurance. However, there are many other reasons to have an insurance policy.
Using life insurance to pay debts
One of the features of this type of insurance is that it is not taxed. Thus, when you pass away, your beneficiaries get a payout. Each estate has debts and taxes to pay, thus, lots of people choose insurance payout to cover such costs. This can be a separate policy, which is different one from one of your family. If you fail to pay your debts, your children will face difficulties in sorting out the bills you have.
It is possible to use life insurance to get loans and withdraw cash. Some policies allow you to accumulate cash balance for you over the years. You will be paying the same premium every month. The amounts you pay are likely to increase as you get older. A cash balance is created, which is the difference between what you are paying every month and what you are required to pay. Thus, you can withdraw the cash balance. However, you will be required to pay it back. If you fail to pay, the amount and the accumulated interest is deducted from life insurance payout.
You can use life insurance to generate some income, which you can use to pay off your debts. When you are young, your contributions are invested thus making your account grow. At a particular point in future, you are paid back your savings. You are free to choose either a variable annuity or fixed income. This is a nice way of getting extra dollars to settle your debts if you short of cash during your retirement.
Life insurance is not only leaving behind huge sums of money for your family when you pass away. It is advisable to take the policy earlier as it is cheaper than taking it late in life. Thus, think about and how you can use it pay off your debts and purchase the policy now.