You probably know that life insurance offers a cash payout at the time of death, but are you familiar with how life insurance can support you, your loved ones and your financial goals while you’re alive?
Living benefits come in the form of cash savings (a component of permanent life insurance policies) and riders which can be added to both term and permanent policies.
Some riders increase your monthly premiums while others come at no additional cost. In either case, they’re a great way to customize (and maximize) your coverage. While this is not an exhaustive list, the following riders would benefit any policy owner, regardless of whether they have children or other dependents.
Also called a life benefit rider, this add-on allows you to access funds from your death benefit in the event of terminal illness (often defined as a life expectancy of one year or less). Having access to this money could greatly relieve stress associated with medical expenses, comfort measures, hospice care and more.
With an accelerated death benefit rider, how you choose to spend your money is up to you (and in most cases is tax free).
The critical illness rider is one of the most popular add-ons and provides cash to cover certain illnesses or medical events like cancer, stroke or heart attack. If your health event qualifies, your carrier issues you a lump sum of money pulled from your policy’s death benefit.
Life is unpredictable and a critical illness rider could provide valuable financial support during a time of rest and recovery.
A chronic illness rider can provide financial support should you become unable to perform at least two of the following: basic mobility, personal hygiene, bathing, toileting, dressing and self-feeding. Once a medical professional determines these limitations to be permanent, you would begin to receive the payout provided by this rider.
With a long-term care rider, you would have access to a portion of your policy’s death benefit every month to pay for long-term care expenses (like staying in a nursing facility or receiving home care). Similar to the chronic illness rider, a medical professional would need to verify that you’re unable to perform two out of the six mobility and self-care activities.
This rider allows you to keep your policy in place but to skip premium payments if you become seriously injured or disabled and unable to work. Once your disability status is verified by a medical professional, your payments would be waived for a predetermined amount of time.
As you can see, riders provide living benefits but are often accessed in times of illness or injury. What sets permanent life insurance apart is its cash savings component—a wealth building tool that can be used both in sickness and in health.
Think of cash value as your policy’s savings account which grows interest over time. Cash from the account can be withdrawn and used for things like paying off debts, funding an education or making a downpayment on a house. The money in your savings account can also be used as collateral for a loan or to pay premiums on the policy itself.
Starting a small business? The cash value component of a permanent life insurance policy can provide employee bonuses, asset protection and more!
As a tax-advantaged investment tool, your policy’s savings account can also be used to support retirement, supplementing social security or replacing a pension.
Why stop at using life insurance for the worst-case scenario when it can also be used to support your life, your career and your golden years of retirement?
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