7 reasons for life insurance during the financial crisis

Ask an agent about the best time to buy life insurance and the answer may be “now,” or “any time.” But consumers seeing the value of their 401k drop in a time of rising interest rates may want to know if life insurance is a good way to add to their savings and retirement accounts during a recession. And if so, why? We put the question to several financial experts and insurance experts. No wonder they agreed that it was a good time to buy life insurance. But their reasons were different.

Why buy life insurance in times of financial crisis?

1. Diversity of history

One of the advantages of buying life insurance in times of bear markets and rising interest rates is the combination of different types. Life insurance companies offer special policies that allow you to not only protect your family or your business, but also allow you to find different types of policies that provide guarantees. One of the special features offered by some life insurance companies is called indexed universal life. In its simplest terms, universal life provides the protection of life insurance, as well as growth linked to an external index, such as the S&P 500 or others. These plans allow you to use a portion of your salary to maximize tax-deferred income and to earn market-matched returns. One of the best features of this model is that if these linked returns are deposited into your account they cannot be lost in the futures market. This allows you to maximize the growth of the economy without losing it.

– Mike Raines, Owner/agent at Raines Insurance Group, Valparaiso, Indiana.

2. Use of resources

There are many types, flavors and variations of life insurance that are used for different purposes.

People buy life insurance because it allows them to use some of their assets without fear of losing them in the end. It is a great power multiplier. Do you have a business? You can take out a loan to pay off your life insurance policy which will help you access the money you have locked up in bricks and mortar and machinery – and you can use those assets without repaying the principal on the loans. Own a business and have more assets that make you pay more taxes. Life insurance can also help solve this problem.

Life insurance is useful if you make a lot of money, it is useful if you have tax problems, it is useful if you die too young. It helps if you are staying for a long time, or if you are very sick. If the money is bad, it’s your back policy. If you sell well, it can help pay future taxes. It allows you to maximize the lifetime value of your other assets by allowing you to use them and still create intergenerational wealth. It can protect you from bankruptcy. Life insurance offers dignity.

– Naoshad Pochkhanawala, estate & financial planner, Chartered Life Underwriter at Amiko Benefits Inc., Toronto, Ont.

3. Save money

Is there a “right” financial time to buy life insurance? Depending on the type of policy one is purchasing, higher interest rates may be beneficial for life insurance. Fixed-term policies earn money, unlike term policies. The value of the money within the plan grows tax-deferred and depending on the type of plan, the interest paid to the plan can be directly affected by the current interest rate. The insurance company uses the money that the owner pays for the money and invests it. Most of these things are affected by interest rates and the higher the interest rate, the more money the insurance company is making on their business (which includes the premiums they pay) and therefore more interest is added to the policy owner’s value. Another reason to buy more insurance during inflation is that the death benefit available is less than it was worth before inflation. If you have a policy with a death benefit of $50,000 for example, that $50,000 is very low during inflation. Our spending on goods and services is more expensive than a few years ago. If you determined that the beneficiary needed $50,000 a few years ago, they may need more than today due to the rising cost of living.

– Mark Williams, CEO Brokers International

4. Peace of mind

If the economy is as bad as it is now – with high inflation and high interest rates – customers tend to start feeling poorer or richer, and life insurance also starts to support their money and assets and help them stay safe. Having a long-term insurance policy with long-term coverage, or even taking out a permanent life insurance policy for anyone, is very important – regardless of financial situation.

– David E. Appel, MDRT member, managing partner at Appel Insurance Advisors, LLC, Newton, Mass.

5. Security

It is difficult to imagine what can happen due to an unfortunate death, but it is important to establish security for loved ones. According to Life Happens and LIMRA, 44% of people say that within six months they will face financial difficulties after the death of a wage earner.

Each person must decide for themselves whether life insurance is the right choice based on what they want, what they are trying to protect, and when they are looking for protection. If a buyer is looking for life insurance that builds cash value and provides guaranteed interest, whole life insurance may be a good option. If a buyer is looking for protection for a certain period of time, wants to protect their income or wants protection to pay off their mortgage or other debts in the event of an accident, life insurance can be a good solution. For senior consumers looking to pay off funeral expenses or pay off credit card debt, end-of-life insurance is the best option.

The increase in prices can make it difficult for people to find their income, which makes it difficult for people to think about this money, but with the use of new digital tools, it has not been easy to use the policy online in a few minutes and be given the options you like for a special budget.

– Jim Reboin, chief financial officer of Afficiency, a digital distributor of life insurance in New York City.

6. Safety and security

During this pandemic, many people have changed their perspective on life’s most important things such as health and wealth, and are turning to life insurance to support their new aspirations for a longer, healthier and better life.

They are also looking for a safe and secure place to invest their dollars and if properly planned, permanent life insurance accounts offer guaranteed and guaranteed returns while protecting these dollars from the IRS, providing immediate cash through tax-free loans and discounts, and possibly. the tax-free growth of those dollars.

Life insurance provides more than benefits to your loved ones when you are gone. Today life insurance companies have taken steps to create “advantages” such as the ability to get the policy without tax to give to the insured to use long-term care or chronic illness. This is an important benefit due to the ever-increasing costs of LTC insurance policies.

Permanent life insurance is more than just a death benefit paid to your chosen beneficiaries. When done right, it can be a great resource for building and protecting wealth.

– Brian Carden, author of “Castles & Moats, Insurance, Investment, and Life Planning Simply Explained”

7. To the family

I didn’t realize how much money can affect the way people make financial decisions, and it’s interesting that when money is good, people forget that it will pass. As the market changes, people tend to think more about their finances.

Unfortunately, life insurance sometimes has a negative connotation, so people tend to avoid it and only start thinking about their finances when they are forced to.
It is always better to put your family first and find financial peace while you are still alive.

The best day to buy life insurance is today, not yesterday.

– Shawn Meaike, founder and president of Connecticut-based life insurance company Family First Life

Doug Bailey is a journalist and freelance writer based outside of Boston. He can be reached at [email protected].

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