When it comes to thinking about life insurance, individuals across all income levels have a number of common feelings. Higher income people may feel that they don’t need life insurance because, well, they’re wealthy and they can likely afford final expenses and extra money for dependents. Lower income people, on the other hand, may feel that though they would really like to have life insurance, they probably can’t afford it. Fortunately (depending on your perspective), both of these notions are not entirely true. Here’s how people in both of these income brackets can rethink the usefulness of life insurance.
Lower Income Brackets
Most common complaints about life insurance are that it’s just too expensive. People with limited resources often struggle to make ends meet. This is especially troublesome if children or other dependents are in the situation. However, certain kinds of life insurance (especially term life insurance) are made to be affordable to just about anybody. Talk with a life insurance provider and do your own research online to find a way to cover the cost of life insurance, thus providing for the people you care about most in the event of your unfortunate passing.
Higher Income Brackets
Well-off people might think that they don’t need life insurance because, hey, they’ve got money. However, for most high net worth individuals, this may not be exactly true. One of the most common ways that people get rich is through ownership of real estate, various intangible assets, commodities, and other property. These assets may not be very liquid in the event of your death, resulting in difficulty covering end of life expenses for the people who stand to inherit your estate.
High net worth individuals also have to consider estate taxes which, if your estate is organized poorly, could approach 50 percent of the value of your assets1. In certain situations, this might put your dependents and family in a situation where they must quickly sell your estate (often at much less than its actual value) just to service the tax burden your estate has. 2
Life insurance types like universal life have an excellent feature that provides the potential to build cash value of the policy, as well as generally being tax free. Life insurance generally is commonly overlooked by the wealthy, who may otherwise have taken advantage of every taxdeferred account option that’s out there. Talk to a life insurance provider who specializes in protecting the assets of their clients, in order to pass on the most of your estate, and the least tax burden, as possible to the beneficiaries of your estate.
Many people are neither rich nor poor, in which case they may take tips from providers, and both of these policy holder types. If you have dependents, or debt that would pass on to people that matter to you, seriously consider getting a life insurance policy that can meet their needs. There are more types of life insurance than you are probably aware of, each meant to help individuals and their families in the event of their demise, with the ongoing expenses of life as well as the final expenses of the policy holder. Research these to find out what the best option is for you.
- Source: https://www.fool.com/retirement/2016/11/11/2017–estate–tax–aspx
- Neither Midland National Life Insurance Company nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.