Monday, August 11, 2008

Life and Home: Similarities Galore

Why do some people buy houses for their primary residence instead of living in apartments?  In most cases, there are a number of reasons, ranging from the desire to own instead of renting to tax-advantaged growth to building equity to overall security.  Do any of those reasons sound familiar?

Permanent life insurance offers many of the same benefits as home ownership.  You buy a home because you want permanence, a place to put down roots, because you are always going to need a place to live.  Renting an apartment is generally a temporary solution to housing needs.  Buying permanent life insurance, whether it be whole life or universal life, is what one does to cover a need that will always be there.  Term insurance is temporary, and the premiums continue to increase, just like rent on an apartment.

Permanent life insurance also offers equity buildup, just like home ownership does.  The cash values will generally increase year to year and can provide equity that can provide equity that can be tapped for emergencies, for college funding, for additional retirement funding, or for many other needs, just like home equity.  The growing cash values in the permanent life insurance policy also offer tax advantages because you don't pay income taxes on the growth as long as it stays in the policy.  The earnings are income-tax deferred.  You can say the same about a home in that you don't pay income taxes on any increase in the value of your home as long as you live there.  Once you sell the home, you may have capital gains tax to pay on the growth if the gains exceed allowable levels and the money is not reinvested in another home.

Permanent life insurance also offers a peace of mind security, just like a home.  You know it's always there protecting you from whatever storms may come, financial or otherwise.  Term insurance, on the other hand, eventually will go away go away because the price gets too high to continue.

For more information on life insurance, contact your Absolute Agent today!

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