Why you need permanent life insurance with a cash accumulation account
Athletes often peak early, financially, and not surprisingly, they also retire at an early age compared to other professions. The nature of their work may likewise increase their mortality rate due to injuries sustained from sporting activities. This calls for intelligent financial management on the athlete’s part. This is important to ensure financial stability for them and their families throughout their lifetime. Taking permanent life insurance coverage would be the best way to safeguard your family’s financial stability. This really comes into play in the event of your death.
Why take permanent life insurance coverage?
In contrast with term life insurance, where beneficiaries of the coverage are paid a particular death benefit for a given number of years, permanent life insurance will last for a lifetime. In addition to this, permanent life insurance offers the policyholder the option of a cash accumulation account. This allows the opportunity to set aside extra savings on top of the premium paid.
What are the benefits of the cash accumulation account?
1. Earn higher interests.
The cash accumulation account’s money attracts a much higher interest. As a result, you earn more interest than what you would typically get with a savings account from most banks. The benefit is that these funds accumulate tax-free, or they are tax deferred.
2. You can use them for premium payments.
As sometimes occurs, you may be financially incapable of paying certain months’ premiums on your life insurance coverage. Usually this would typically lapse the contract. In that case, the funds in your cash accumulation account can give you a cushion you until you’re back on track. This is helpful in ensuring that your policy is still in force.
What is cash accumulation?
3. You can take loans out against life insurance.
Funds in a cash accumulated account can be accessed by the policyholder in certain instances. One for example, is while they are still alive, by taking a loan out against the life insurance plan. A significant advantage of this type of loan is that the money in that account will maintain its tax-deferred status.
4. The beneficiaries get more money.
Questions arise when the money in the cash accumulated account is not used by the policyholder. In that case, the policy’s beneficiaries will receive it together with the policy value amount of the coverage. This happens upon the policyholder’s death. This means you will leave your family in a better position financially, which would ease their economic burden.
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