Today, most often persons might have already procured Life Insurance via their job, but they may not be familiar with the Importance of Life Insurance while purchasing Real Estate. If you are planning to invest in real estate, then it is essential to be acquainted with life insurance and the advantages associated with it.
The purpose behind obtaining a life insurance policy is that the insurance company covers the beneficiary or survivors after the demise or death of the policyholder. It can be utilized to cover the monthly expenses and full mortgage balance, or other debts if any. Insurance is classified into two namely:
- Whole Life Policies are type of policy procured for a specified monthly rate. It accumulates money value upon the execution of payments. It would last until he/she make the payment within a stipulated time or expiry of the maturity period.
- Term Policies are meant for a certain duration wherein you have to make payments on time. You do have the liberty to close a policy at any point in time.Most often, this particular policy is preferred for mortgage holders.
If you intend to purchase a property, then Life Insurance could be an excellent option and most often mandatory for lending institutions. Different types of Life Insurance have optimal growth. You can either leverage it in the form of a loan/mortgage or withdraw as a partial surrender of the policy. The policy can be utilized to purchase a property. However, a Life Insurance company has imposed restrictions by fixing a certain percentage of money to be withdrawn in the form of a loan. Apart from the down payment, the cash can be used to cover medical expenses, emergency money, tuition fees, and shopping. Besides, the above-mentioned funds can be utilized for charitable donations.
Funds can be withdrawn from a Life Insurance policy in the below-mentioned ways.
- Partial surrender which is also termed as withdrawal
- Full surrender
The importance of Life Insurance while purchasing Real Estate implies that it would help you to minimize the dividend payment. It does not involve any further tax consequences as well. As the rate of real estate continues to escalate, Life Insurance comes to your aid to purchase a property and assists you in developing or provides equity for the acquisition of real estate.