4 Benefits of Life Insurance for the Here and Now

You’ve shopped around for whole life insurance and have found a policy that yields the best benefits for your family; it covers everything from your funeral preparations to aiding in supporting them for years to come. However, you may not be aware that there are some ways you can reap the benefits of your life insurance policy during your life as well.

You don’t have to only consider end-of-life benefits when choosing your life insurance policy. Here are four ways you can utilize the quality advantages of your life insurance policy during your lifetime to benefit your family and help you prepare for the next stage in your life.

1. Minimize Taxes in Your Retirement

A whole life insurance plan can be used as a tax-free form of cash flow during retirement. As a policyholder, you can utilize your life insurance in a way that’s similar to how you use a personal pension: you can make tax-free withdrawals during retirement. In this way, your life insurance policy operates like a retirement savings account, as you can use it to generate cash flow during retirement.¹

Keep in mind that article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your tax strategy.

2. Use It to Fund Your Child’s College Tuition

Your whole life insurance policy could benefit the next generations of your family sooner than you think. Potentially, your life insurance policy could yield a better rate on a loan for your child’s (or your own) education than an actual student loan. What’s more, when it comes to paying back the interest, the money goes right back into your policy.

Additionally, your life insurance can also cover your student loans should any debt exist in your estate. In such a case, your life insurance coverage can cover the tax placed upon your debt.

3. Explore Living Benefits

When unexpected events occur, your life insurance policy can function as additional cash flow support through living benefits. That is, a portion of the death benefit can be used when certain situations arise during your life. With this arrangement in place, the death benefit is not entirely used during your life, but you can still rely on the added financial support of life insurance benefits during your life.

Living benefits can provide financial assistance in the form of chronic illness benefits, which can provide aid to cover support for various activities, such as dressing and eating. Terminal illness benefits are also available through your life insurance policy, and this requires certification by a physician. For those with a life expectancy of less than 12 months, their life insurance policy can provide financial support for medical care through living benefits.

4. Sell It Should You Outlive Your Policy

Believe it or not, outliving your life insurance policy is a possibility. If this should be the case for you, when your policy term ends (and if you have never made a claim), your insurance company could return the premiums you have contributed toward your policy. (If you have whole life insurance, always check the specifics of your individual policy.) Once you have received the premiums, you can use them as you see fit, and this might include investing the funds or saving them.

Outliving your life insurance could be considered one of the more unexpected benefits of your policy. Policyholders have the option of continuing coverage, receiving the funds in a tax-free savings account, or taking out loans against your policy. Depending on your financial needs when your term ends, the opportunity to receive a payout from your life insurance policy is another way to benefit from your policy during your life.

1. IRS.gov, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. 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. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. 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. Copyright FMG Suite.