Life insurance and bank products serve different purposes and offer different benefits. Below are some of the key benefits of life insurance over bank products
Protection: The primary benefit of life insurance is protection. Life insurance provides financial protection to your loved ones in the event of your unexpected death. The death benefit can be used to pay off debts, cover living expenses, or provide an inheritance to your beneficiaries. Bank products such as savings accounts or certificates of deposit (CDs) do not provide this level of protection.
Tax-free benefits: The death benefit paid out by life insurance policies is generally tax-free, which means your beneficiaries receive the full amount. On the other hand, bank products are subject to income tax, which reduces the amount of interest earned.
Estate planning: Life insurance can be used as part of your estate planning. You can name your beneficiaries and specify how the death benefit should be used. This can be particularly useful if you have complex family situations or significant assets to protect. Bank products do not offer this level of flexibility.
Cash value: Some types of life insurance policies, such as whole life insurance, offer a cash value component that grows over time. This can be used as a source of savings or as collateral for a loan. Bank products, such as savings accounts or CDs, do not offer this type of cash value.
Guaranteed benefits: Life insurance policies provide guaranteed benefits, such as a death benefit or a cash value component. Bank products, on the other hand, are subject to market fluctuations and may not provide guaranteed returns.
In summary, while bank products can be a useful tool for saving and investing, life insurance offers unique benefits in terms of protection, tax-free benefits, estate planning, cash value, and guaranteed benefits. It’s important to carefully consider your financial goals and needs when deciding which product is right for you.
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Vincent A. Virga
Author/Advisor
Insurance products are offered through the insurance business PFS Wealth Management Group. PFS Wealth Management Group is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by PFS Wealth Management Group are not subject to Investment Advisor requirements. Investing involves risk including the potential loss of principal. Any references to [protection benefits, safety, security, lifetime income, etc.] generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.