The Financial Benefits of Life Insurance
Most people have the impression that a life insurance policy is all about illness and death and the benefits, or payouts, due to them for those reasons. Life insurance is a safety net, a financial investment in your family’s future well-being. Yet there are many ways life insurance can benefit the living, benefits that are often overlooked. These benefits can provide financial support for medical expenses and help maintain your quality of life, and those closest to you, under certain circumstances. In that sense, life insurance is as much about life as it is about death and what happens to those who survive you.
Living benefits
Life insurance policies can be purchased with riders that will pay out money if you’re still alive. For example, someone who’s terminally ill can receive a portion of their death benefit while still living, for whatever reason. Someone who’s chronically ill can receive advance death benefits if unable to perform basic daily activities like eating, bathing or getting out of bed. And if you’re diagnosed with a critical illness like a stroke or cancer, you could receive some or all of your death benefits while still alive.
Other living benefits
Permanent life insurance policies build equity, or “cash value,” over time that enable policyholders to reap living benefits like guaranteed, tax-deferred growth, which is guaranteed never to decline in value and can support your financial position with stable growth. Or you can borrow money against your life insurance policy using its equity and death benefit as collateral any time you want. You can also choose to take cash dividends for additional insurance, which increases the death benefit and value of the policy. A permanent policy can also be used to supplement retirement income without restrictions that apply to 401(k) and IRA accounts. If your college-age children have life insurance policies they can use their cash value for tuition and housing expenses. Legacy gifts, long-term care, and tax benefits are other ways that a life insurance policy may benefit the living.
Selling a life insurance policy
Retirement and medical care often come with unexpected expenses that can leave you scrambling for any assets you can find. Sometimes, those assets aren’t there. Fortunately, you can sell a life insurance policy for an immediate cash settlement you can use for many reasons. Most people who sell a policy are 65 or older with a health condition and have a universal, whole or convertible term policy with an existing value of $100,000. People often sell policies because they can no longer afford the premiums, they don’t need the policy anymore, because the policy is nearing its expiration date, because they want to supplement retirement income, or need cash for expenses.
A word on final expense insurance
And while it’s not life insurance, final expense, or “burial,” insurance, is an alternative and affordable option for people on a fixed budget. It covers funeral home expenses, memorial and cremation services, caskets and plots, headstones, urns and final medical expenses. The premiums are lower and it’s easy to qualify for a final expense policy. If life insurance isn’t an option, consider final expense insurance to ensure your family doesn’t have to deal with out-of-pocket costs in the event of your death.
A life insurance policy can help you and your family in a number of ways by providing needed funds at a time of medical crisis and in the event of terminal or chronic illness. It’s a flexible way to protect your family and maintain a reserve of money if needed.
If you’d like to find out more about the benefits of life insurance, contact us at 614-235-0777.
