5 lesser known benefits of life insurance

Insure

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Key takeaways:

Life insurance policies often include secondary benefits that many people, even policyholders, aren’t always aware of.
In some cases, policies can be used to help pay for long-term care, medical bills, or disability income.
You may be able to borrow against your life insurance to help supplement your retirement

You're careful about your family’s financial health, so you’ve purchased life insurance to help ensure your loved ones will be taken care of. But life insurance policy benefits can extend beyond this main purpose. In fact, you may even be able to capitalize on your plan right now. Read on to learn about five lesser-known benefits of life insurance.

1. Providing disability income

We all face the possibility of being temporarily unable to work at some point in our careers. Fortunately, if this does happen, your life insurance plan may be able to help. You can add a rider to some policies that can provide you with a monthly stipend if you’re unable to work. These riders are sometimes used in lieu of long-term disability coverage and may include the ability to waive payments until your disability is over. This can help prevent the policy from lapsing, and you can resume paying once you’re back to work.¹

2. Paying for long-term care

Similar to disability, you may be able to use your life insurance to help cover long-term care expenses. This type of benefit is traditionally added via a rider as well and may also cover costs for home health aides. Planning for possibilities like these may be a smart financial move, and can also give your family reassurance.²

3. Providing living benefits

If you’ve purchased a term or permanent life insurance policy, there’s a strong likelihood that you can use a portion of the death benefit as a living benefit. This gives terminally ill individuals the ability to receive part of their payout while they are still alive. People often take advantage of this option when they have significant medical bills that need to be paid.³

4. Retirement income

You might be surprised to learn that a life insurance policy can be used to help supplement your retirement. If you choose to purchase permanent life insurance, you may be able to borrow as a loan or withdrawal against it as the policy holder. Most permanent policies have the potential to accrue “cash value” over time, and that money can be withdrawn or loaned to support as an additional source of retirement income – or you can borrow against it to help cover unexpected expenses in an emergency. It’s important to keep in mind, though, that if it comes time to pay the death benefit on the policy before the loan is repaid, your beneficiaries will receive less than you originally planned for them.⁴

5. Making a charitable donation

Most people might not immediately equate a life insurance plan with philanthropy, but your policy can aid a charity you care about. Rather than leaving money in your bank account and earmarking it for an organization in your will, you can use some of those funds to purchase a permanent life insurance policy that may enable you to ultimately make a larger donation.⁵

Life insurance is designed to protect your financial health in more ways than one. It’s worth looking into the different options a life insurance policy offers so that you know all the ways you and family might benefit.

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