Most individuals consider life insurance coverage when they consider what will happen when they pass away. A life insurance policy, however, offers several advantages that you may make use of even when you’re still alive. Four of these advantages are described in a recent blog article by Shari Mattingly Bevan of Bevan Wealth and Tax Strategies.
Ms. Bevan first suggests that you reduce your tax burden during retirement. During retirement, a whole-life insurance plan may be used to provide tax-free cash flow. Life insurance can be used as a personal pension by policyholders, and retirement withdrawals are tax-free. Your life insurance policy functions in a similar manner to your retirement savings account in that you can utilize it to create cash flow when you’re retired.
Second, Shari Bevan suggests using it to pay for your child’s college expenses. Future generations might gain from your whole-life insurance policy sooner than you realize. When taking out loans for your child’s (or your own) education, your life insurance policy may provide better rates than a normal student loan. The money used to pay back the interest is redirected into your insurance policy. Should there be any debt when it passes into your estate, your life insurance can also pay for your student debts. Your life insurance coverage can pay the taxes imposed on your debt if your estate contains any student loan debt.
The third option is to look at the advantages of life. Your life insurance policy’s living benefits might act as additional cash flow assistance when the unexpected happens. In some circumstances, a portion of the death benefit may be paid out as living benefits. By doing this, the death benefit can be partially spent while you’re still alive and policyholders can still rely on the additional financial assistance provided by life insurance. Chronic disease advantages that allow you to obtain assistance with different activities, such as dressing and eating, might offer financial support in the form of living benefits. For individuals who are certified by a doctor, your life insurance policy also offers compensation for terminal illnesses. Those who require financial assistance for medical care during the portion of their life expectancy that is less than 12 months can make use of the living benefits provided by their life insurance policy.
To sum up, Shari Bevan suggests that if you have outlived the insurance, you might want to think about selling it. It’s possible to outlive your life insurance coverage, believe it or not. If this were the situation for you, your insurance provider may reimburse your premium payments if you haven’t filed any claims by the time your policy’s term expires (if you have whole-life insurance). Of course, you should periodically review the details of your policy. After receiving them, you are free to do with them as you like, including investing or saving the money.
One of your policy’s more surprising advantages may be that you outlive your life insurance. The money can be received in a tax-free savings account or used as collateral for loans, allowing policyholders to continue receiving coverage. The possibility of receiving a payment from your life insurance policy is another method to profit from your policy during your life, depending on your financial needs once your term is up.
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Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.
