Why Go for Life Insurance Policy?

Why go for a life insurance policy? This is the most common query of the people planning to buy life insurance San Antonio.

Well, most people know that life insurance is for the financial protection of their loved ones, but what they actually want to know is what the benefits of buying a life insurance policy are. Let’s understand why one should go for a life insurance policy.

Financial protection

The main advantage of life insurance policy is it provides you high life risk cover that keeps your family protected in case of an unfortunate event. Life insurance policy promises the insurer to give monetary compensation to beneficiaries instead of premium paid upon the death of the insurer. It is called the death benefit. The amount of money the insurance company guarantees to the beneficiaries is described in the policy and paid to the beneficiaries upon the death of the insured. It provides a secure financial future to the dependents of the insured.

The insured chooses its desired death benefit amount based on estimated future needs and living standards of surviving members. For high coverage, you have to pay a higher premium. And it is not guaranteed that you will get the desired coverage. Many factors like age, current health condition, and lifestyle play an important role in determining the amount of coverage. The insurance company will determine whether or not the insured qualifies for the coverage based on the company’s terms and conditions. If you do not fulfill the conditions, you may be denied the desired coverage, or you have to pay the higher premiums for obtaining desired coverage.

Work as saving account

Another key benefit of buying life insurance San Antonio is it offers you a cash value. Life insurance policies like whole life insurance and universal life insurance give you cash value and allow you to have savings for the future in the form of cash value. It is like a savings account where you save a certain amount every month. The fixed amount of your premium is deposited as a cash value. The cash value of life insurance earns a modest rate of interest, and accumulated earnings are tax-deferred. Hence, the cash value of life insurance will increase over time.

The cash value can be used by the policyholder, during the life of the insured for several purposes, as described in the policy. Some policies such as whole life insurance policy may have restrictions on cash withdrawals depending on the purpose of the money withdrawn. However, you can still withdraw the money after paying penalties.

Tax benefits

Another key reason for buying a life insurance policy is that investments made in the insurance policy are subjected to rebate and death benefits are generally tax-free to the beneficiary, cash values grow tax-deferred during the insured’s lifetime, cash value withdrawals up to the total premiums paid are generally income-tax-free, policy loans are income tax free, and life insurance policy may be exchanged for another life insurance policy without incurring current taxation. Life insurance enjoys favorable tax treatment, unlike any other financial alternatives.

Risk-free investment

Last but not least; the investment you made in a life insurance policy is risk-free. Death benefits are assured. The cash value is guaranteed. There is no way you can lose your money. And why a life insurance policy is termed as an investment because not only it gives monetary compensation worth more than your premium but also cash value with interest. However, returns will be low as compared to other investment options, but whatever it is, it will be guaranteed. And it is not even fair to compare life insurance with direct equity, mutual funds, or debt mutual funds as these options have high risks associated with them, whereas with life insurance policy, zero risks are involved. If you pay your premium on time, you will be guaranteed returns.

So these are the key reasons why you should go for life insurance San Antonio.