Taking out life insurance can be overwhelming. Information overload, emotional challenges, and high premiums—numerous scenarios run through your mind. Despite everything, you wish to protect your family, and that is all that matters.
Let’s take a closer look at four benefits of taking out life insurance in Singapore, so you can make an informed decision.
1. Support for Dependents and Beneficiaries
As the head of household, you have a plethora of responsibilities. Paying off the mortgage, sending kids to college, and managing debt—the list goes on. If something were to happen to you, the money from your life insurance Singapore will support your family.
Experts suggest that a life insurance policy should be ten times your current monthly income. This is especially important since living costs in Singapore have been consistently rising.
With an insurance policy, your beneficiaries can comfortably manage utility bills, mortgage payments, and educational expenses. Lastly, life insurance will help cover funeral and burial costs, so your beneficiaries won’t have to dip into their savings or take out loans.
2. Proactive Planning for Later Life Needs
Think of life insurance as a long-term investment. It can help you pay for crucial later life needs, such as retirement, buying a house, or funding your child’s education. This is possible if you take out a whole life or universal life insurance policy.
For instance, whole life insurance allows you to build cash value alongside the death benefits. The cash value accumulates over time, which means you’ll have a decent amount in a set number of years.
You can either withdraw money from this cash value or borrow against it. Most policyholders use their cash value for retirement. You can also use it for necessary expenses, such as buying a car or making a down payment on a house.
The bottom line is that life insurance can offer financial stability when you need it the most.
3. Ability to Add Riders
No two families have the same financial needs. Luckily, life insurance policies don’t follow a one-size-fits-all approach. Depending on your financial goals and health conditions, you can customize coverage and gain additional benefits. These are typically known as riders. Types of riders include:
- Accelerated death benefits
- Accidental death benefits
- Waiver of premium
- Long-term care (LTC)
- Guaranteed insurance
For instance, if you’re diagnosed with a chronic or terminal illness, you can add accelerated death benefits to your life insurance policy. As a result, you will be able to acquire your death benefits to pay for treatment and medication.
Similarly, a long-term care (LTC) rider allows you to pay for a long-term care facility and a full-time care provider.
4. Tax-Free Payout
When your life insurance comes into effect, your beneficiaries receive a predetermined amount. Luckily, this amount is not taxed. Your beneficiaries don’t have to report this money when they file for taxes.
That being said, if you choose a cash value whole life insurance and make early withdrawals, you will have to pay taxes. It is best to get in touch with your policy provider to make an informed decision.
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