How Life Insurance Can Boost Liquidity

Most people are not aware that their life insurance could be a source of reliable liquidity. If you are among such people, have in mind that life insurance can boost liquidity:

For personal uses

Most times, the assets of a family might be tied to a business, financial markets, or home. In the event of a major crisis, families would have to liquidate their assets to access funds to meet their needs. And in most cases, it is somewhat difficult to get people to buy assets at such short notice. But with life insurance, your loved ones can be immediately provided with funds in the event of your death. It also prevents your family from selling its assets to maintain their standard of living.

For estate uses

Settling the costs of a large estate is an expensive venture. To avoid the huge financial burden, most families prefer selling off their valuable assets. However, thanks to life insurance, these assets can be kept in the family and passed on to other family members. This is possible because the benefits from life insurance is enough to pay off huge estate taxes and settlement costs.

For business uses

There are various ways life insurance can boost the liquidity of your business. We have listed some of those options below:

  • Key person: In most businesses, the death of the business owner or key employee can adversely affect revenues and even bring the company to a halt. However, with life insurance, your business can quickly have access to funds that would ensure its continuation.
  • Buy-sell agreement: If your business partner dies, the family of the deceased would be the new owners of the business share. And if you are interested in buying the shares from them, the buy-sell agreement feature of life insurance will give you the funds to carry this out.