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  • What benefits does life insurance have while I’m alive?
  • December 11, 2013
  • insurance death benefitBy

    For many people, the words “life insurance” mean death benefits–a tool only useful after a policyholder has died. Many don’t realize the important benefits a life insurance policy can provide while the policyholder is still alive.

    “Cash values available through permanent life insurance can provide funding to supplement retirement income,” said State Farm Insurance spokesperson, Angie Rinock. “Cash values through permanent life policies grow at interest rates that are generally guaranteed by the insurer.”

    A policyholder can also take out loans from the insurance company using the policy’s cash value as collateral. However, the loan must be paid back, or else the amount of any outstanding loan or interest will be deducted from the policy’s face amount when the policyholder dies.

    While a policy provides protection against the financial consequences of premature death, its cash value could be used as additional income during retirement.

    A parent or grandparent who is saving for college tuition can access the accumulated cash value of their permanent life insurance policy to help pay college expenses.

    There are other uses for life insurance. A person with a history of medical problems can add a policy rider to some existing life insurance policies, which allows the policyholder to draw on his death benefit if he is terminally ill. Cash values can be accessed and used for business reasons as well. For example, a business owner could use the cash value of a policy to purchase his partner’s interest in the company.

    As the holiday season approaches, many decide to give a little bit extra to a favorite charity or religious affiliation. There are a variety of ways that life insurance can be used as a contribution and thank you.

    If giving to a foundation or church, it is important to meet with a resource professional since some may not accept gifts of life insurance, many times because they lack the understanding of its parameters. Many non-profit organizations and other affiliations offer instructions on their individual websites for permanent endowment procedures. Life insurance donations have become quite popular in recent years.

    While a sound strategy for retirement should be everyone’s goal, life insurance does provide a unique opportunity to save up for retirement. It can provide payment of the face value of the policy when the insured dies, but allow the accumulation of cash value during the policyholder’s lifetime.

  • Category: Articles Library, Industry News, Life Insurance, Videos

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