When most people hear the term “life insurance,” they think it only provides benefits after death. However, life insurance can offer valuable advantages while you’re still alive. According to Forbes Advisor, nearly 1 billion American families rely on life insurance for economic protection, including financial and retirement security. Let’s explore how you can leverage your life insurance policy before passing away.
1. Living Benefits: Critical and Chronic Illness Riders
A Living Benefit, also known as a critical or chronic illness rider, is an add-on to some life insurance policies that allows you to access a portion of the death benefit in the event of a serious illness. This feature can help cover long-term care expenses or other healthcare needs, preserving your hard-earned retirement savings.
2. Permanent Life Insurance and Cash Value
Permanent life insurance policies, such as whole life or universal life insurance, offer more than just coverage—they can also serve as a retirement savings tool. These policies build cash value over time, which can grow in various ways. Some policies offer a guaranteed rate of return, while others may be linked to an index like the S&P 500.
3. Accessing the Cash Value of Your Life Insurance Policy
If you hold a permanent life insurance policy, you have several ways to access its cash value:
• Withdrawals: You can withdraw funds tax-free up to the amount you’ve paid in premiums.
• Loans: Borrowing against the cash value is an option. The interest rate is specified in your policy, and while repayment is optional, unpaid loans will reduce the death benefit.
• Surrender: By surrendering the policy, you withdraw the entire cash value but cancel the coverage. This should be a last resort after exploring other options.
4. Selling Your Policy: Life Settlement
Did you know you can also sell your life insurance policy? Known as a life settlement, this option can be available for both permanent and term policies. The value of a life settlement depends on factors like your age, the length of the policy term, the cash value, your current health, and any included riders or options.
Explore Your Options
To understand the living benefits of your current policies or to explore new life insurance options, contact our experts. We can provide a comprehensive review and guide you through the best choices for your financial future and family’s security.
By demystifying life insurance, we hope to help you make the most of its benefits, both now and in the future. Reach out to Amber Rice-Manella at 610-898-6510 for Life Insurance quotes.
