Life insurance has seven functions:
- First function is family protection, just like building a house to lay foundations, life insurance is the foundation of family financial planning and is indispensable.
- Second, permanent life insurance also has the function of accumulating funds, with money saved for future use. Both index-based universal life insurance (IUL) and whole life insurance (Whole Life) have a cash value. The main purpose and purpose of the cash value of the policy is personal savings, loan debt protection, retirement subsidies, children’s future education expenditure, living expenses, business investment, down payment for buying a house, personal loans (policy loans do not require credit records, no approval procedures, But it depends on the cash value of the policy), capital flow, etc.
- Third, buying various life insurance is equivalent to some kind of forced savings or investment. If you use it to buy insurance, you will be deducted from your bank every month, which is equivalent to forcing you to save. You can accumulate a considerable cash value after 10 years. Many customers’ down-payment for house purchases or credit card debt repayments are based on the cash value of the policy to save for an emergency.
- Fourth, life insurance has tax benefits. Claims afterward are tax-free. Various permanent life insurances have a cash value. The money earned in the cash value is completely legally tax-free (Tax-Free) and earned in the cash value. According to Article 7702A(b) of the Internal Revenue Service, the insurance company will not give you the 1099 tax form for the money made in the policy, nor will it notify the Internal Revenue Service. In the future, it will not be taxed when it is withdrawn from the cash value or lent out when the insurance is valid.
- Fifth, permanent life insurance is an effective tool for making children’s education fund. In addition to the tax benefits mentioned above, the cash value on life insurance is not included in assets, so it will not affect children’s application for funding.
- Sixth, the cash value of life insurance and death claims are not recoverable by the creditor nor by the lawsuit. Industries with high incomes and high risks, such as doctors, are willing to buy a lot of life insurance because life insurance is a powerful weapon for asset protection.
- Seventh, life insurance is indispensable for estate planning and the most cost-effective tool. IRS requires people to pay money 9 months after the death, and as long as cash, no real estate, people without cash only have to sell houses and land cheaply in order to realize the way as soon as possible. If there is life insurance, when the insured person dies due to illness, accident, or old age, the insurance company will hand over the claims to the beneficiary within one month.