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Life Insurance Month: Plan Ahead for You and Your Family

Life insurance often evokes melancholy thoughts and mental images of unpleasant circumstances. But it serves as more than just a family safety net for unanticipated events. With its ability to provide opportunities for wealth building as well as peace for your loved ones, life insurance can also be an effective financial tool. 

In this article, I share how life insurance can provide both a vital lifeline for your family after you're gone and opportunities for financial gain.

Shielding Your Family From Financial Hardship

An important goal of life insurance is to give your beneficiaries a lump-sum death payout which they can utilize to preserve their financial stability and pay for various expenses.

The following are a few ways life insurance can provide that safety net:

• Childcare expenses: If you have small children, life insurance can pay for daycare expenses, freeing up your surviving spouse to focus on raising the kids or carry on working.
• Education costs: Your children's education might be funded with life insurance, helping them reach their educational objectives.
• Income substitute: Life insurance can help replace lost income if you're the family's principal provider, helping your family to continue to pay for necessities.
• Debt payment: Life insurance can relieve your family of financial burdens by helping to pay off outstanding bills like credit card balances, auto loans, and mortgages.
• Estate taxes: To verify that your possessions can be passed on to your heirs without incurring severe financial constraints, life insurance can sometimes be used to help satisfy estate taxes.

You can be proactive by putting in place life insurance to safeguard your family's financial future and feel confident they'll be okay even if you're not there.

Leveraging Cash Opportunities

But in addition to being a safety net, life insurance can also be a powerful financial tool when used strategically. Leveraging the cash value in your life insurance policy is one such tactic. 

A permanent life insurance policy, such as whole or universal life, has a cash-value component that's a growing tax-incentivized savings account. This part of your insurance is a valuable  addition to your financial portfolio because it can be invested in, borrowed against, or withdrawn from.

But to optimize the cash value of your life insurance policy effectively, you need to have the right information and a well-planned strategy. Without sufficient knowledge, policyholders risk missing out on significant growth potential or making mistakes that undermine the potential gains of the policy. 

Let's look at some ways your life insurance policy's cash value can be used:

• Volatility Buffer - Hedge Against Market Downturns: permanent life insurance can act as a hedge during market downturns by providing access to cash value without having to sell your traditional stock/bond portfolio at depressed prices.
• Opportunities for education: You can use the cash value to help defray the cost of college tuition and other expenditures by funding your child's or grandchild's education.
• Inheritance: You have the option to leave your heirs the death payout as an inheritance, giving them a one-time payment they can use anyway they like.
• Cash for heirs: You might be able to take out a portion of the cash value if you need money during your lifetime, leaving your heirs with less money to inherit after you pass away.
• Retirement income: In certain circumstances, you may be able to use the cash value to create retirement income, which would give you extra cash flow throughout your golden years.
• Estate planning: Life insurance can be included as a component of your estate plan in order to facilitate a smooth transition of your assets to your loved ones.

It's important to remember that the gains and restrictions associated with cash-value life insurance may differ based on the conditions of the policy and your unique situation. To find out how life insurance can align with your needs, it's wise to speak with an experienced financial professional.

Partner With Us

Effective management of your life insurance policy is essential to verify that it continues to meet your hopes and needs as life evolves. Regular reviews of your policy are crucial, especially after significant life events such as marriage, purchasing a home, or welcoming a new family member. 

White Oak Wealth Partners was founded on the principle to always do what is right for our clients. A key distinction of our firm is the way we work with other professionals, including (and especially) yours to build and execute the optimal strategies aligned with your unique situation and objectives.

To get started, contact us by calling 814-835-4551, emailing MICHAEL.NEDRESKI@LPL.COM, or scheduling an appointment here.

About Michael

Michael Nedreski is managing partner at White Oak Wealth Partners, a specialized financial lifestyle and wealth management firm serving entrepreneurs, business owners, executives, and their families. Mike has 30-plus years of experience in the financial services industry and is committed to serving his clients through holistic financial planning, disciplined investment strategies, and proactive personal service. 

A native of Erie, Pennsylvania, Mike began his career in the financial services industry in 1988. He has earned the Chartered Retirement Planning CounselorSM (CRPC®) designation conferred by College for Financial Planning (188-LPL). Mike is also an active member of the Financial Services Institute (FSI) and Financial Planning Association (FPA).

When not working, Mike enjoys spending time with his wife, Amy, and their children. He volunteers in his community and at his church and his children's schools. An outdoors enthusiast, Mike loves hunting, fishing, golfing, and spending time near or on the water. He also enjoys working out and watching some of his favorite sports teams, the Pittsburgh Pirates and the Cleveland Browns. To learn more about Michael, connect with him on LinkedIn.