Life Insurance Facts We Wish We Learned in School

If you’re an adult, you can relate: there’s so much in life that we wish we learned in school, especially when it comes to money. Whether it’s managing a budget or saving for retirement, #adulting means we either figure things out on our own or call mom and dad (trust us on this: we’re never too old to ask our parents for advice).

Since we didn’t get these lessons in the classroom, here’s a crash course of topics we think should be taught in school along with reading, writing and arithmetic.

Help with unexpected expenses*

Here’s the deal: you should be putting money away for retirement whenever you can. But did you know that life insurance can accrue cash value? You’d choose whole life insurance, which is designed to last for life, unlike term life insurance, which provides coverage for a set number of years. Whole life policies build cash value that grows over time and you can take loans against to help cover emergency expenses. While it’s always good to have a dedicated retirement fund, the cash value can come through in a pinch.

*Policy loan interest rate is 8%. Loans may impact cash value and death benefit.

Ways to use life insurance

There’s no one right reason to get life insurance. People have traditionally used life insurance as a way to cover final expenses, but the payouts can be used for any purpose that fits your family’s needs or your stage in life. For example, some want the benefits to pay for homes, childcare expenses or college tuition. Term life insurance is useful in this case since you can choose a term that keeps you covered until the house is paid off or the children are grown. Others see life insurance as a way to leave something for their children or grandchildren — whole life insurance works here since it doesn’t expire. What you want to do with the benefits can help you choose the kind of life insurance and the coverage amount you may need.

Tax benefits of life insurance

Here’s the good news: in most cases, beneficiaries don’t have to pay taxes on life insurance benefits. So if you have a $100,000 policy, your beneficiary should get all $100,000 as long as the payout is made as a single payment. You should speak to a financial advisor, though, since estate and inheritance tax laws can vary by state.

There’s a lot more we want to cover, but these are the basics we think everyone should know. It’s never too late to start learning and life insurance specialists at Gerber Life are just a phone call away (and there won’t be a pop quiz!). You can always count on us to help you get through this adulting thing. Keep an eye on this blog for more financial tips you (probably) didn’t learn in school.