7 lesser-known benefits of life insurance

Key takeaways

• Life insurance can offer benefits beyond a death payout.
• Permanent life insurance may let you borrow from the cash value.
• Riders can add protection for disability, illness or long-term care.
• John Hancock Vitality rewards healthy living with savings and discounts.

In order to ensure your loved ones are cared for in the future, you purchased life insurance. Did you know that life insurance policy benefits can extend beyond the future? In fact, you may even be able to capitalize on your plan right now. Read on to learn about seven lesser-known benefits of life insurance.

1. Living benefits and riders

For families with dependents, a life insurance policy may offer support during serious health events that affect income and daily stability. Depending on the policy, riders may provide disability-related income support, help with long term care planning or allow access to part of the death benefit if the insured is diagnosed with a terminal or chronic illness.
 

These features may also help ease the financial pressure that can come with caregiving for individuals supporting aging parents.

These options do not apply to every policy, so it is important to review the specific contract and rider details. But for families balancing income, caregiving and long-term planning, living benefits can make life insurance feel more relevant today.

2. Retirement income

If you own a permanent life insurance policy, it may build cash value over time. As the policyholder, you may be able to access that cash value through a loan or withdrawal, depending on policy terms. Any amount you take out - and any loan that remains unpaid - can reduce the policy’s cash value and death benefit.

That access may give you an additional source of funds in retirement or help cover unexpected expenses along the way. It can be a useful feature for people who want more flexibility from their policy, but it is important to understand the trade-offs before using it.

3. Making charitable donations

A permanent life insurance policy may be one way to support a charitable goal. Some policies can build cash value over time. That value may be used as part of a broader legacy strategy.

This can be helpful for someone who wants to make a future gift to a charity they care about. Instead of relying only on cash set aside today, the policy may help create the potential for a larger charitable donation later.

4. Supporting estate planning

A life insurance policy may support estate planning by providing a death benefit to named beneficiaries. In many cases, the death benefit is generally not subject to income tax, and when a beneficiary is properly named, the payout may bypass probate.

That can make the policy a practical way to transfer wealth to the next generation. It may also help loved ones access funds more quickly during a difficult time.

5. Helping protect a family business

A life insurance policy may be used to help fund a buy-sell agreement in a business with one or more partners. In that arrangement, the policy can provide the money needed to buy out a deceased partner’s ownership share.

That can help protect the business the partners built together and make the transition smoother for the surviving owners. It may be especially relevant for business owners who want a clear succession plan in place if one partner dies.

6. Providing financial protection for stay-at-home parents

A life insurance policy on a stay-at-home parent may help provide financial protection for the household if that parent dies. It can help replace the value of services that were previously handled at no direct cost, such as childcare or household management.

That can be especially important for families who depend on that support every day. The policy may give the surviving spouse time to adjust without facing immediate financial pressure.

7. Earning rewards for healthy living

The John Hancock Vitality Program rewards members for completing health-related activities. Members earn Vitality Points, which can be used to unlock premium savings, rewards and discounts from popular retailers.

The John Hancock Vitality Program supports healthy habits today while adding value to the policy over time.

Discover what your life insurance policy can do

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 your family might benefit.

Explore John Hancock life insurance options today by speaking with a life insurance agent to find the coverage that best fits your needs.

Loans and withdrawals will reduce the death benefit, cash surrender value, and may cause the policy to lapse. Lapse or surrender of a policy with a loan may cause the recognition of taxable income. Withdrawals in excess of the cost basis (premiums paid) will be subject to tax and certain withdrawals within the first 15 years may be subject to recapture tax.  Additionally, policies classified as modified endowment contracts may be subject to tax when a loan or withdrawal is made.  A federal tax penalty of 10% may also apply if the loan or withdrawal is taken prior to age 59 1/2.  Cash value available for loans and withdrawals may be more or less than originally invested. Withdrawals are available after the first policy year.

Vitality is the provider of the John Hancock Vitality Program in connection with policies issued by John Hancock. John Hancock Vitality Program rewards and discounts are available only to the person insured under the eligible life insurance policy, may vary based on the type of insurance policy purchased and the state where the policy was issued, are subject to change and are not guaranteed to remain the same for the life of the policy.

Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02116 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595.

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