The general public's idea of life insurance is often simple: When the insured person passes away, a lump sum is paid out to the beneficiaries. That's part of the process, but there are some other benefits that you might not be aware of — particularly for whole life insurance policies.
Here are some benefits to keep in mind.
- Loans. You can borrow from your own life insurance policy against the cash value (for whole life insurance). This can be used to cover emergencies and medical expenses, and even retirement costs. If you do not pay the loan off — along with the interest — the costs may eventually be recouped from the benefits to your loved ones. But this is just one of the living benefits of carrying life insurance.
- College Expenses. If you want to send the kids to college, you can use the cash value of your whole life insurance policy to help them attend the school of their choice. A great upside to paying for college with life insurance: This type of financing is not taken into account when federal financial aid is calculated.
- Paying Off Debts And Taxes. Rather than leaving your family to sort out the details, you can arrange your life insurance policy specifically to pay off debts that you left behind when it pays out. This allows your family time to process your loss without having to immediately be bombarded with paperwork and financial decisions to deal with.
- Charitable Contributions. If you like, you can have your life insurance pay out a set amount to a charity of your choice. With a permanent policy, this will allow for a federal estate tax deduction.
Life insurance is different from many other forms of insurance in a few ways. For one thing, your insurance policy will be building cash value throughout your life. This can be used for several purposes as living benefits. Further, the beneficiaries of your life insurance policy can be just about anybody — from family and friends to charities.
Contact your Berryhill Insurance Group agent and see what options you have available to you.
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