Having a life insurance policy protects you and your family in the event of death. It might seem wasteful to contribute to your policy when it’s about to expire, especially if you have no debt or have a significant amount of savings that you feel is enough to support you. Before you cancel your life insurance policy, take these points into consideration.
Investment
A life insurance policy has a guaranteed sum intended to be dispersed upon the client’s death, called a death benefit. Investing in alternative options such as the stock market can lead to a loss or gain, but investing in a guaranteed policy gives you the assurance that you have a specific dollar amount to rely on.
Benefiting your Descendants
Life insurance can help your spouse or children after you pass away, even if they don’t necessarily need the money to survive. It can help them with everyday expenses, serve as a down payment on the purchase of a home, put money towards college tuition, or aid with paying off current debt. Your spouse will also benefit from having the additional financial support during this rough time in their life.
Premium Increase
Allowing your policy to lapse leaves you uncovered and can make it more expensive if you want to get life insurance in the future. Getting a policy can be as simple as filling out a few forms or as complicated as scheduling an exam and having your health reevaluated by a primary care physician. Depending on what the physician finds, new risks may result in a significant premium increase.
Selling your Policy
It is becoming more common to sell your life insurance policy via life settlement to get cash quickly for retirement or other expenses during life. You’ll get less than the death benefit, but more than if you just canceled your policy outright to save money.
Safeguard on Retirement
You may depend on a 401k, pension, social security and other investments to support you through retirement, but you never know when something can go wrong. The social security system can change how benefits are distributed, or maybe your pension amount decreases. Plan for the unexpected and have a backup financial plan for added security.
Don’t let your investment go to waste by letting your life insurance policy expire. There are ways it can help you, even if you don’t think you’ll benefit from paying the premiums anymore. You won’t regret having that reassurance for yourself and your family.
