If you don’t like thinking about life insurance, no one can blame you. Thinking about your own mortality and what you’ll leave behind after you’re gone is rarely a pleasant thing, but it’s something you’ll need to deal with to ensure that your family, or other dependents, are taken care of should the worst transpire. It’s better to go ahead and secure a life insurance policy sooner rather than later as well, even if you don’t have beneficiaries at the moment. It’s easier to get a higher amount of coverage for a lower premium rate when you’re still young and in excellent health.
There’s no shortage of great places to check online for life insurance quotes, so you can start figuring out what kind of policy will work for you right away. If you can’t afford much coverage right now and need to stick to the lowest premium possible, you can always secure a death benefit with term life insurance. A term life plan protects you for an agreed-upon amount of time, often ten to 30 years, and you can always renew it or convert it into a permanent policy later on when you can afford more. While this type of life insurance is pretty straightforward, you might be surprised at some of the additional benefits offered by life insurance coverage. Here are just a couple of big ones you should know about.
You can use your life insurance as a way to save.
Most people will have at least a basic savings account, and they may have a retirement account or investments as well. No matter how much you have, it’s always good to have a little more, though, right? A traditional life insurance policy guarantees a death benefit to your beneficiaries, and it also gives you an extra way to save through building cash value.
This is a type of permanent life insurance policy that includes a saving component. The policy builds cash value when you either invest insurance dividends into the policy or when you pay additional monthly premiums in advance. It’s also possible to use dividends to purchase additional coverage over time, meaning the policy will have a bigger payout when the time comes. There are also variable life insurance plans, which let you invest the cash value in multiple subaccounts that work similarly to mutual funds. Variable life funds are subject to market changes, of course, which means their saving component incurs the highest risks, but these plans also have the greatest potential for returns.
You can access your payout early, under certain conditions.
While it’s true that a life insurance policy will only pay its full death benefit upon the insured’s death, that doesn’t mean you aren’t able to access any of the money early if you have a unique situation. For example, you can attach an accelerated death benefit to most life insurance plans, which will allow you to draw cash advances against the death benefit. While this will reduce the payout that your beneficiaries will receive upon your passing, it can allow you to live much more comfortably while still providing your dependents with something.
Alternatively, you can choose to sell your life insurance in exchange for a lump sum that exceeds the cash value of the policy but is less than the death benefit. There are third party companies and individual investors who purchase life insurance and take on the responsibility of the monthly premiums in exchange for becoming the beneficiary of the death benefit. A special kind of sale, called a viatical settlement, is available to the terminally ill, and it pays out more than a typical life settlement. Ultimately, anyone with a life insurance policy can choose to sell it in a life settlement if they no longer need it.