4 Ways Your Life Insurance Policy Can Benefit You While You’re Living | Tips from Our Financial Advisors
September is Life Insurance Awareness Month and while it’s important to discuss life insurance at any time of year, this month we are taking a deep dive into the ways your life insurance policy can benefit you during your lifetime.
In exploring your whole life insurance policy options, you may have chosen a policy with end-of-life care in mind. However, you may not have considered there are some ways you can reap the benefits of your policy while you are living. There are more ways your life insurance can benefit you beyond funeral preparations and supporting your family for the years to come. Check out these four ways you can utilize the advantages of your life insurance policy during your lifetime to benefit your family and help you prepare for the next stage of your life.
1. Minimize Taxes in Your Retirement
Whole life insurance policyholders can use their life insurance as a tax-free form of cash flow during retirement1. Similar to personal pensions, your life insurance policy could operate like a retirement savings account, and you can make tax-free withdrawals.
2. Use to Fund Your Child’s College Tuition
You can use your whole life insurance policy to benefit your loved ones sooner than you may think. There is the potential that your life insurance policy could yield better rates than an actual student loan (this could come in handy for your own student loans as well). When the time comes to pay back the interest, the money goes right back into your policy.
Your life insurance could also cover your student loans should any debit exist when it goes into your estate. If your estate contains any student loan debt, your life insurance coverage can take care of the tax placed on your debt.
3. Explore Living Benefits
If the unforeseen should ever happen, your life insurance policy can function as additional cash flow support through living benefits. Living benefits can be received as a portion of the death benefits to be used in certain situations. This way, the entire death benefit is not used when you are still living, but policyholders can still rely on the added financial support of life insurance benefits when they are alive.
Living benefits can provide financial assistance in the form of chronic illness benefits in which you can receive aid when it comes to things like food and clothing. Terminal illness benefits are also available through your life insurance policy for those who have been certified by a physician. Those needing financial support for medical care that is shorter than 12 months during their lifetime can use the living benefits of their life insurance policy.
4. Sell Your Policy If You Outlive It
Outliving your life insurance policy is a possibility. If this happens to you, when your policy term ends (and if you have never made a claim), your insurance company could return the premiums you have made toward your policy if you have whole life insurance (of course, you always want to check on the specifics of your individual policy). Once received, you can use them as you see fit, like saving or investing.
Outliving your life insurance could be considered one of the more unexpected benefits of your policy. If you outlive your policy, you then have the option of continuing coverage, receiving the funds in a tax-free savings account, or taking out loans against it. Depending on your financial situation, when your term ends, the opportunity to receive a payout from your life insurance policy could benefit you greatly.
It’s always a good time to discuss life insurance and discover how it could benefit you and your family. You could reap the benefits while living and provide support to your family after you pass. Check out these other articles to learn more about life insurance and how it can benefit you.
5 Things to look for when choosing a life insurance policy
History and statistics on life insurance
September is National Life Insurance Awareness month
- https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds/life-insurance-disability-insurance-proceeds
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.