The Hidden Benefits of Life Insurance You Didn’t Know About

24/7 Insights

• There are some hidden benefits for life insurance policyholders. 
• Most people have yet to learn how to take a loan from a policy. 
• It also will be a surprise that life insurance can be used for medical expenses. 

For many families, life insurance is not just a nice thing but an essential component of providing for the future. If the worst-case scenario happens and someone passes away, life insurance may be the lifeline many families need to feel financially secure while they figure out how to grieve and move on with life. 

While comfort and security might be the primary reason for life insurance, it’s certainly not the only benefit of this popular policy. Instead, there are some hidden benefits of life insurance policies you might not know about and will find incredibly valuable now and likely well into the future. 

Cash Value Accumulation 

One of the most important benefits of a permanent life insurance policy, as opposed to a whole life or universal life, is that it comes with a “cash value” component. This means that your policy’s cash value can grow tax-deferred over time, and you can access this cash while you are still alive. 

While it’s not quite a savings account in the typical sense, you can tap into this money for things like buying or renovating a home, education costs, or even supplementing any existing retirement income. Alternatively, you can consider it a rainy day fund you can draw on should any financial emergency happen. 

Living Benefits

Another hidden benefit of life insurance is access to money while living. Assuming you were offered it as an option, many life insurance policies have an additional rider known as an Accelerated Death Benefit. This rider allows you to access a portion of your policy’s total amount if you are diagnosed with a terminal illness. 

Once you access this money, it can be used to help pay down medical expenses or for alternative medical expenses like hospice. In some cases, you can even use the money to supplement lost income while receiving treatment for your diagnosis. There is no question this rider can help act as a safety net for many. 

Protection from Creditors

One additional hidden benefit of life insurance most people are likely unfamiliar with is that the money is protected from creditors. This means that the cash value of the life insurance policy cannot be used to settle any outstanding debt after death. Any money passed along to any beneficiaries of the policy will not be used to settle any outstanding debts that may have been incurred while living.  

Long-Term Care Benefits

While not standard on every life insurance policy, having a long-term care benefit rider can be hugely beneficial. If you need assistance with costs associated with nursing home or assisted living expenses, a hidden benefit of some policies is this rider, which can help pay for some of these costs. This is a clear pattern among the hidden benefits in that you can draw on this money for unexpected medical expenses while living. 

Policy Loans

Another theme of hidden benefits is the opportunity to begin a policy loan without any credit check. This enables life insurance policyholders to borrow against the value of their life insurance policy without undergoing what would otherwise be a lengthy loan approval process. 

As you’re borrowing against what is essentially your money, you don’t have to risk denial of the loan. This is yet another way to access funds quickly in an emergency and offers far less time to access the money than a traditional loan from a bank would otherwise require. 

Tax-Free Payout

Receiving the full payout of your life insurance policy tax-free isn’t necessarily a hidden benefit, but it’s not something many people understand. While other inherited assets may be subjected to various estate taxes that can take up as much as 40% of the amount, you don’t have any of the same concerns with a life insurance policy. In other words, Uncle Sam doesn’t see a dollar of your policy as the beneficiaries will receive the full amount.

A Quote in Minutes

If you are unsure about the exact amount of coverage needed for you and your family, it’s always wise to get a quote and explore your options.

A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. With affordable rates and customizable policies, life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.

Click here to visit our website and learn how to get a quote in just a few minutes.

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