3 Ways to Use Your Life Insurance Before You Die

You may view your life insurance policy as a necessary evil. For years, you have been making your payments relying on your policy’s value to pay for your final bills and support your loved ones after you are gone, but have you considered the value that your life policy holds while you are still alive?

Most policy owners look at their coverage as an asset. A permanent life policy has an investment aspect that allows policy owners to increase the value of their payout over time. The advantage comes when you accumulate enough value that you can borrow against your policy before you die.

With over 70 million Baby Boomers moving through their retirement years, many people are looking for ways to pay for their golden years and special care that may become essential. Let’s take a closer look at a few of the ways you can use your life insurance before you die, like selling your policy to Windsor Life Settlements.

Use Your Cash Value

Your permanent life policy has been accumulating cash value for years thanks to its investment component. Permanent policies can be borrowed from as a source of income for any reason. Although term policies tend to have lower premiums, your benefits will only be paid out after your death. There are several ways that you can tap into the cash value of your permanent life insurance policy.

Loan

• Most insurance companies will allow policy owners to take out loans on the cash value of their coverage. Each company has different rules about loans so it’s important to discuss any loan conditions with your broker. Policy loans do not generally have any firm repayment schedules. However, your loan amount will accumulate interest and reduce the amount of your final payout.

Withdrawal

• Policy owners can withdraw any amount of available cash with no interest payments. Your death benefit will be reduced by the same amount as your withdrawal and increase your monthly premiums.

Surrender

• If you need a larger lump sum, you have the option to surrender the full amount of your life insurance policy. However, this is essentially canceling your policy and forfeiting your coverage. 

​Sell Your Policy

If you need to access your policy coverage before death to pay for medical bills or senior care, you can sell your policy to a secondary investor. You will be able to receive a lump sum or annuity payments from your policy. Your payout amount is generally a more considerable amount than your policy’s cash value but smaller than your final payout amount. The purchaser will take over the payments for the policy and become the final settlement beneficiary.

Living Benefits

If you meet specific requirements, you may qualify to receive up to 50% of your policy payout prior to your death. This benefit will allow you to get the money you need without draining your policy of any final death settlements. You can apply for several different kinds of benefits.

Chronic Illness

• If you have a chronic illness that requires you to have help with daily activities, including cooking, bathing, cleaning, and personal hygiene.

Long Term Care

• This benefit rider may increase your premium payments and give you access to the care you need for your retirement.

Terminal Illness

• For policy owners diagnosed with less than 12 months to live may qualify for benefits that can help with end of life care expenses.

While your life insurance policy’s main purpose is to help pay for expenses and legacy payments following your death, there are ways to take advantage of your coverage while you are still living. Tap into the cash value, sell your policy, or apply for benefits to help you enjoy your golden years in comfort.