Top reasons to have a life insurance

” Singles or married alike must know that certain life insurance policies have valuable cash value. There is no restriction as to where you can use the cash value for. “

A lot of people are skeptical about the value of a life insurance. You have auto, home, medical policies. You may have these because you are obliged legally by DMV or mortgage company. Or you are afraid of confronting astronomical medical bills. You tend to be more prepared for the catastrophic events that may happen in your lifetime. But the reality is, you have to be even more prepared when you pass away, especially when you have love ones to protect. As once one unknown author puts it, “You don’t buy life insurance because you are going to die, but because those you love are going to live.”

The basic and most compelling value of a life insurance is income replacement. Imagine you have a monthly income of $3,000. That is used to buy food, clothing and provide shelter. You may be renting. Or you own your house with mortgage so part of the income is used to pay that. Or even if the mortgage is paid off, you still need to pay property tax, insurance and utilities to make the house livable. You use that income to pay other things, like car payments, child care, education, phone bills and other insurance. You also spend for recreation, do charitable contributions, you gift, and the list goes on and on… For a second, imagine you die now… The income stops. How then will you be able to provide those things moving forward? Those left behind can be financially devastated. But if you have life insurance to replace that income, devastation can be avoided altogether. They already lost your presence and love, and they are now grieving. One thing you can do and must prepare is at least provide them financial security and protection through a life insurance.

Immediately after your passing, some expenses and funeral arrangements need to be made, like viewing, mortuary, burial or cremation. Last medical bills need to be paid. How about tax, income in respect to the decedent, or if you have lots of assets, perhaps estate tax? Somehow those left behind have to address these payments. Is it not a wonderful idea to have a life insurance that will cover all these final expenses?

True, singles may not need to buy much coverage, as they may not be supporting other people. But even singles agree that buying to cover these final expenses makes sense. Singles who also have non-dischargeable debts or who have co-signed loans would want to have life insurance covering these. A responsible single doesn’t want a loan company hounding the co-signer for payments.

Singles or married alike must know that certain life insurance policies have valuable cash value. There is no restriction as to where you can use the cash value for. You may use the cash value to pay for home improvement, fix your car, house downpayment, children’s education, and even to supplement your retirement income. The cash value is liquid. It also grows tax-deferred. In fact, generally, the distribution can be tax free. In a way, it works like Roth IRA, in that all the years of accumulation of principal and gains, you don’t pay tax. And if you distribute money out, you can also avoid paying tax. High-income earners who are not even qualified to Roth IRA ride on this tax-advantaged vehicle.

There are several ways that cash value can be growing inside the policy. It can be in the form of fixed interest, or dividends, or gains from direct stock market or mutual fund trades, or interest credited based on the upward movement of an index without the risk of investing directly in the stock market. Does it sound complicated already? Anyway the idea is the cash value can grow with good rates of return and locked-in gains.

While you are alive, your policy may also have certain valuable living benefits. For example, some policies may accelerate the death benefit to cover chronic, critical and terminal illness. The chronic illness coverage in particularly is important because health insurance like Medicare is limited. Medicare covers 100 days of stay at skilled nursing facilities (SNFs). In Los Angeles, the stay is easily above $8,000 a month. Unless you have Medi-Cal and it’s accepted by that SNF, two great alternatives to your own bank account to pay for the stay would be either a stand-alone long term care policy or this life insurance covering the chronic illness.

There are other great reasons why you want a life insurance. For more information, please contact Joseph Doratan through 855-955-1800 or [email protected].

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If you have more questions regarding the enrollment periods or other insurance questions, feel free to ask the author for answers. A good telephone number to reach him is 855-955-1800. You can also check out

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