Why tax season can be a perfect time to buy life insurance

Scoring a refund check from the Internal Revenue Service makes for a pretty good day. A refund gives you the chance to put that money to work to better your financial future in some powerful ways. That’s enough money to get excited about all the things you can do with your cash. In fact, nearly 90 percent of taxpayers with young children expect a refund this year, according to Haven Life’s tax season survey.

The opportunity for a refund check might conjure up images of you lying on a tropical beach somewhere sipping a fancy drink with an umbrella in it. However, a refund check is also a great excuse to take some of the cash and buy life insurance to protect your loved ones. Though, only 5 percent of families with young children plan to use their refund to buy life insurance based on the taxpayers we surveyed.

Sure, life insurance might not seem like an obvious or exciting choice, but we’re going to explain why it might be a financially heroic move to make.

Maximize your refund

With tax time on your mind, it’s a great idea to put together a game plan for your refund check. Chances are if you don’t have a plan in place your refund will vanish just like any cash that sits in your bank account. So why not have the best of both worlds: use some of your refund for fun and the rest to propel you forward financially.

There are lots of gold medal-worthy items you can check off your financial to-do list with your refund check. The options are limitless, but here are some of the winners.

All of the above are great ideas, and you can’t go wrong, but what about taking this opportunity to put some life insurance coverage in place? Before you decide there are a million things on your to-list before life insurance, consider the powerful benefits.

  • Life insurance is a great way to protect your loved ones and provide some much-needed cash if something were to happen to you.
  • Life insurance death benefits are generally tax-free and can be used to help pay debt you’ve left behind or the mortgage, be put toward college for your kids, or help replace lost income.
  • Life insurance can provide amazing leverage for your money. Term life insurance is affordable and a powerful way to leverage a substantial amount of money for a relatively small premium amount. More on this below.
  • Having some life insurance in place can give you peace of mind when you go to sleep at night. There isn’t a crystal ball that can tell us how our life will play out. Why not be prepared and protect your family?
  • Individual term life insurance (the kind you can purchase outside of your job) stays with you for the length of the term you buy (10 years, 15 years, 20 years, 30 years). As long as you pay the premiums, you’re covered for that term length.

Let’s talk leverage

It’s true; the payout from a life insurance policy can be used to pay day-to-day expenses now, and could also be put toward long-term expenses down the road for your beneficiaries. That alone would be reason enough to see if life insurance is a fit for you. Life insurance also provides excellent leverage for your dollars.

For example, a 30-year-old woman in excellent health who is looking for a $500,000, 20-year term life insurance policy would pay $19.46 a month for a Haven Term policy issued by MassMutual. That’s just $233.52 a year, or $4,670.40 to leverage $500,000 of life insurance coverage for 20 years. Now that’s some powerful leverage. Get your term life insurance quote here.

Life insurance can provide amazing benefits to your loved ones, all without breaking the bank to purchase a policy. Yes, life insurance isn’t for everyone. However, if you’re one of the lucky ones that are expecting a tax return check, why not put some of that money toward purchasing a life insurance policy.

Life insurance that's actually simple.

Estimate your rate

Shannah Compton Game is a CERTIFIED FINANCIAL PLANNER®  professional with an MBA and is the host of the award-winning podcast, Millennial Money, where she shares totally relatable and easy to understand financial advice that will actually make you want to talk about money.

Haven Life doesn’t provide tax, legal or investment advice. This discussion is intended as general education only. We encourage you to work with your own personal tax or legal professionals and your financial advisor. Opinions expressed by the author are their own and do not necessarily represent the views of Haven Life.

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

Get the latest news

Apply now