So often when we purchase life insurance, whether Term Life, Whole Life or Guaranteed Universal Life, the first thing we think of is who will benefit from it; those we leave behind. We seldom think about using life insurance while we’re living. The reality is there are many reasons to use it during our lifetimes.
A first is to help take care of our loved ones in case we become incapacitated by illness or injury. Critical Illness or Disability Riders can help pay bills when you can’t. If you are injured and can’t work for a period of time, who will pay the bills? Or, if you are diagnosed with cancer, have a heart attack or stroke and have to be off work, again, who will pay the bills? The recommended amount of savings for emergencies is at least three months, but most people are lucky to make it month-to-month.
A second reason is to help pay for your retirement or help meet your financial goals with a Return of Premium Rider. At first glance a Return of Premium rider may seem like it doesn’t make much sense. After all if you pay for a policy with death benefits and then ask for a refund of all your premiums, you don’t have a death benefit, right? But, to someone who has about 15 years to work before retirement and not enough of an IRA or a 401K, a Return of Premium Policy makes complete sense. Personally, I know several people who have been out of work for too long, and the time to make up the losses to their retirement accounts is limited. Meeting those goals through a life insurance policy with a return of premium rider will add just enough peace of mind that retirement at a reasonable age is possible again.
It isn’t a living benefit, but one that gives you peace of mind that you’re protecting your family’s livelihood later. You can use your life insurance policy as a savings account to pay for estate taxes. One of the benefits of life insurance is the death benefit is paid to your beneficiary free of income tax, so if you are anticipating a large estate tax bill, you can leave your death benefit as a trust to help pay that bill so your loved ones don’t have to.
Learn more about the living benefits of life insurance by calling an AC Financial Adviser at (800) 564-3136.