6 Things you May Not Know You Can do with Permanent Life Insurance
Permanent life insurance provides protection throughout your entire lifetime. There are many kinds of permanent life insurance policies. However, the most common type is premium whole life insurance, which is sometimes referred to as “ordinary life” or “continuous whole life”. This kind of policy has a fixed or level periodic premium that assumes you will maintain the policy throughout your life. Additionally, the death benefit remains the same throughout the duration of the policy. Permanent life insurance is designed to be affordable for the length that you decide to maintain it. One notable feature of permanent life insurance is that it accumulates a cash value, which gives it many other uses than just as a way to ensure your loved ones are left financially stable if you pass away. Here are six applications of permanent life insurance that you may not know about.
1. Fund College Tuition
Since permanent life insurance accumulates a cash value over time, you can borrow against it if you want to. Although you should use caution in doing so, there are some useful applications to this. One such application is the ability to borrow against it to aid in paying for college tuition or some other secondary education expense. In fact, you may use the cash for anything that you please. However, you should be cautious to ensure you are using it smartly and not just to fund everyday purchases. Using it to fund a college education means that you do not have to apply for loans from your bank, and you will not have to fill out complicated financial aid forms. Instead, you simply have to inquire about the money, and it is yours. Keep in mind that draining the cash value of your policy will affect your death benefit.
2. Create a Business
The hard part about starting a business is that you cannot borrow a bank loan if your company is not already making revenue. This means that you need to figure out how to fund the company by yourself, and this needs to come out of your pocket or from borrowing money from family or friends. However, one often-overlooked source of cash flow for starting a new business is that from a permanent life insurance policy. Just make sure that you are making a smart investment in a business that has a real potential of succeeding.
3. Take Time Off Of Work
A permanent life insurance policy enables you to take work off for whatever unexpected event that occurs. For instance, if you need to look after your older parents, your policy can allow you to do so without placing an economic burden on your family. Unlike putting a kid through college or using the policy to start a business, there’s no way to control when a family emergency comes up. However, you can rest easy knowing that you can use your life insurance to sustain your family while you take work off to deal with an emergency, which eases a substantial amount of stress.
4. Get Needed Funds For Chronic Illness
If you develop a chronic illness and are ill enough that you are unable to live daily life continually, there are some permanent life insurers who will give you early access to the death benefit of your policy. You essentially will be able to obtain your death benefit’s money while still being alive. This will result in your beneficiary receiving the remainder of the death benefit once you pass away, which subsequently lowers the amount of benefit your recipients receive. Due to this, it is not an ideal alternative for long-term care insurance. Nevertheless, it is an option.
5. Receive Additional Insurance
In most instances, when you purchase a permanent life insurance policy as a single individual and then marry, your life insurance requirement will increase. Additionally, such significant life events such as having a child or getting a promotion will warrant an increase in your life insurance. One added use of permanent life insurance is your ability to enhance the value of your life insurance during important life events. You can even choose to set up an increase in life insurance at specified intervals. Just to name one example, every fifteen years of marriage. The best part about this is that when increasing your life insurance with a permanent policy, you do not have to go through a long and tedious underwriting process over and over again. Even if a major life event does not call for an increase in your life insurance, having the ability to do so can aid in countering the rising costs of goods due to inflation.
6. Maximize Your Pension
Leveraging a permanent life insurance policy is not just for the wealthy. For instance, if you have taken out a reverse mortgage, you can dedicate a part of the monthly payments to your life insurance policy. This allows you to preserve your house’s value for your heirs while still maintaining a home for them. A permanent life insurance policy can also help you in the case of a decrease in your retirement income. If your pension makes up a good amount of your retirement plan, this can leave your loved ones in danger if you pass away. This is why maximizing your pension with a life insurance policy can be incredibly beneficial. You can even design your pension and Social Security benefit with a permanent life insurance policy in mind.
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