Best Life Insurance in Ontario California
The primary reason most people purchase life insurance is to provide for their families needs after they are gone. The individual pays a monthly premium to guarantee that upon their passing their loved ones will be provided for. This is how most people approach life insurance. They aren’t wrong but they are missing out on some of the additional benefits. There are numerous ways a life insurance policy can help both you and your family deal with unforeseen circumstances and plan for the future.
Some people need their insurance policy to address specific needs beyond just paying off whatever debts they may leave behind. The majority of these specialized policies fall under the umbrella of whole life insurance. Unlike term life insurance which covers the insured for a specified period of time, whole life covers the policyholder over the course of their lifetime, provided they pay the premiums and the policy doesn’t expire. Another advantage of whole life insurance is the fixed premium rate which is not affected by age. Riders can increase the death benefit beyond the face value of the policy. Whole life insurance also accumulates cash value over time; an important feature for anyone who is looking for a safe, guaranteed investment.
Life insurance is versatile; it can help cover lost income, pay off a mortgage or final expenses. There are policies available that can cover almost any circumstance. Here are a few examples of how life insurance can play a bigger role in your overall financial planning.
A mortgage is one of the biggest debts most people assume during their lifetime. Consequently, how the mortgage will be paid off, if unforeseen circumstances occur, is a major concern. The thought of a spouse or children having to leave the family home due to poor financial planning is enough to keep a person up at night. Mortgage protection insurance is designed to pay the mortgage if the policyholder dies or is disabled. It may also cover job loss. With this policy in place, the insured party never needs to worry about losing their home if they are no longer able to make the payments.
Most people’s debt decreases as they get older. The kids are on their own. The mortgage is paid off. Any major debt has been eliminated or reduced. The last significant financial event that most older people plan for are their funeral costs. Final expense insurance can help the spouse or family cover more than just the cost of their loved one’s services and burial, it can also be used to pay medical bills and other incidental costs such as lodging and transportation for family members attending the funeral. Many people buy final expense insurance as a rider to their whole life policy.
Estate tax relief
You’ve probably heard that life insurance benefits cannot be taxed. This is true up to a point. When your spouse is the beneficiary this isn’t an issue. Married people are allowed to transfer assets to one another without paying income tax. But, if your children are the beneficiaries, your policy could be taxable. One way to avoid having life insurance proceeds included in your taxable estate is to transfer the policy to another competent adult. This person can even be a beneficiary. There are a few important things to remember before you sign the paperwork. Once the policy is transferred it cannot be returned to the original policyholder; which means if the policy is transferred to a spouse, they will retain ownership in the event of divorce. Also, the premiums must be paid by the “new” policyholder. The original owner may gift the money to the new policyholder to pay the cost of the premiums, but they cannot make the payments directly.
Despite its name, an income replacement policy will not fully replace income lost as a result of death or disability. The amount paid is capped at a percentage of your income, in some cases up to 70 percent, which varies depending on the policy. In the case of disability, the policy may remain in effect until the insured individual reaches retirement age, provided there is no change in their condition. Most states require employers to carry disability insurance that will offer similar benefits to the injured worker, but there is one important difference between an employer-paid policy and one the individual pays for themselves; a private policies benefits are not taxable.