5 Ways Life Insurance Overcome Debt Depression

  Saturday, September 23rd, 2023   Partner Content

Debt is common to many people’s daily lives. The causes of it vary from person to person, but it usually involves gambling, addiction, medical expenses, poor money management, and social and economic disparities, such as people of color and sexual minorities.

It has worsened after the financial repercussions of the COVID-19 pandemic’s global economic crisis. For example, one recent survey shows that 70% of Americans admit to being financially stressed due to inflation, economic instability, lack of savings, and unemployment.

Not being able to cope with the emotional stress of debt causes many people to suffer from depressive symptoms, now famously called “debt depression.” The good news is that we can overcome it, and one way to do this is through life insurance. Here’s how:

<h4 class="mb-0 pb-0">Life Insurance Ensures Life Protection

Having life insurance means your family gets an amount of money in case of your demise. In other words, it will act as an income replacement that ensures your loved ones will have the same (or even better) standard of living.

Specifically, the insurance payout they get can be used for debts, children’s education fees, and other future daily living costs. Being able to support these liabilities and expenses can help them keep their savings secure and avoid the costly cycle of debt.

<h4 class="mb-0 pb-0">Life Insurance Generates Wealth

Many insurance providers offer savings opportunities in a life insurance policy. These can be taken advantage of even before death. This saving perk is referred to as cash value. It’s an investment feature of a policy that earns interest and matures.

Cash value grows tax-free during the entire life of your policy. They’re tax-deferred, which means they aren’t tax-deducted every year, so they’ll grow even faster, allowing you to build wealth.

All life insurance policyholders can enjoy these tax rules on life insurance. However, there are several kinds of life insurance, and each has varied nuances in its terms, so some may get confused. In this case, running research is vital to avoid making costly mistakes.

One way to do this is by comparing different plans. Tap into platforms and sites that can help you browse for insurance policies and get online quotes that consider your lifestyle. If you’re busy, immediately contact and seek guidance from a professional financial advisor or insurance agent.

<h4 class="mb-0 pb-0">Life Insurance Provides Access to Funds

The proceeds of your cash value may be available to withdraw or borrow against to fund long-term life goals or in case of an emergency, such as unplanned yet urgent hospital admission. These withdrawals are typically tax-free unless they’re worth more than the total premiums.

<h4 class="mb-0 pb-0">Life Insurance Supplements Retirement Income

The built cash value can also be used as an additional source of retirement income. Most financial experts recommend adding it to your pension to maximize its benefits and increase your funds to cover daily retirement expenses.

Another way is reinvesting cash value to build funds. For example, you can use it to buy an annuity. It’s an insurance contract between you and an insurance provider, where you’ll make a series of payments or lump-sum payments, and, in return, they’ll give you regular disbursements in the future.

The benefit of purchasing an annuity is that it provides the potential for guaranteed lifetime income. Specifically, it helps cover essential daily living expenses in retirement that aren’t already covered by social security or pensions.

An annuity can also provide principal protection and the option to pass the funds to your beneficiaries. Other annuities may also be optimized or upgraded to help you pay for long-term care in the future.

<h4 class="mb-0 pb-0">Life Insurance Covers Healthcare

Not only does life insurance offer financial stability, but it also provides healthcare benefits. Its “life insurance riders” ensure you or your family won’t get stuck in medical debt or other liabilities in case of eventuality.

Riders are additional coverages added to a basic insurance policy to meet the policyholder’s needs. One example is the “waiver of premium” rider, which waives an insured’s future premiums when they’re permanently disabled or unemployed due to injury or illness. This is highly recommended if your line of work is dangerous.

Moreover, if your family has a history of medical illnesses and you’re your family’s breadwinner, adding a “critical or chronic illness” rider to your insurance is recommended. This is often only applicable if you’re not yet diagnosed with a certain disease. Most insurance providers will also only cover an illness that’s defined by your policy. On a positive note, the funds can be used to pay related medical costs and serve as a living benefit.

<h4 class="mb-0 pb-0">Final Thoughts

With life insurance as your financial safety net, you’ll be free from the negative thoughts that come out of financial hardship. Overall, securing life insurance is a smart move to future-proof your personal finances and support your optimal well-being.

Depression, Debt, Life Insurance