Exploring How Living Care Benefit Impacts Life Insurance Policies
A life insurance policy is commonly described as a way to protect your loved ones if you pass away. However, you may not be aware that life insurance also provides you with specific benefits while you are still alive. Here is an overview of living benefits life insurance.
Defining Living Care Benefit
As the policyholder, life insurance allows you to establish cash value through your policy. The cash value continues to build throughout your lifetime. This is known as a living benefit of life insurance because you can use it while you are still alive. It is the opposite of your policy’s death benefit.
You can build cash value by using a cash value life insurance policy. The premium is a little higher than it would be for a term life insurance premium because it provides long-term benefits. It accumulates cash value for a longer period compared to a term life policy, which only provides coverage for a specific length of time.
Defining A Rider
You can add a rider to your policy. A living benefit rider provides extra coverage to your traditional life insurance policy. The rider provides extra benefits and protection. However, in most cases, there is also an extra cost involved. The rider is an asset if you are dealing with an issue that isn’t completely covered by your traditional insurance policy. You can use the rider to create a custom policy that aligns with your needs.
If you are suffering from a terminal illness, you may have the option to receive an accelerated benefit rider that pays out some of your death benefits while you are still alive. You can use the payout to help put things in order. If you pass away, your beneficiary will still receive the rest of your life insurance death benefit.
Obtaining a Loan Against Cash Value
You can receive a loan against the cash value of your life insurance policy if you are dealing with an emergency. You can also use it to help pay for your kid’s college tuition or to supplement your income. The most important thing to remember is that this is a loan. You have to repay it before you pass away or your risk your death benefit being impacted by the amount of the loan plus interest. In some cases, not paying the loan interest may result in the policy defaulting. It may be worth the risk though, especially if you have kids who plan to attend college in the future. You can use your life insurance policy’s cash value to help pay for their schooling. That reduces some of the pressure to meet the gap in financial aid calculations. The life insurance policy also allows the cash value to experience tax-deferred growth.
The living care benefit of your life insurance policy provides you with a safety net in the event of an emergency. Looking to secure an ideal life insurance plan based on your financial circumstances and needs? Contact us at Club Agency Insurance Brokerage in Garden City, New York today. We are here to assist you with all your coverage needs.