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May 27, 2024

Can You Use Your Life Insurance While You Are Alive? 

a man with a surprised look on his face thinking about using life insurance while still aliveLife insurance is commonly associated with providing financial protection for loved ones after the policyholder’s passing.

However, many people wonder if there are ways to utilize life insurance benefits while still alive.

Understanding Permanent Life Insurance

One type of life insurance that offers benefits during your lifetime is permanent life insurance. Unlike term life insurance, designed to provide coverage for a specific period, permanent life insurance policies remain in effect if premiums are paid.

These policies typically include a cash value component, which may accumulate over time and can typically be accessed by the policyholder during their lifetime.

Ways to Use Your Life Insurance While Alive

With permanent life insurance policies, policyholders may be able to access the cash value through withdrawals. It’s essential to consider the potential impact on the policy’s death benefit and overall cash value growth when making withdrawals.

Another option for accessing the cash value of a permanent life insurance policy is through policy loans. Policyholders may be able to borrow against the cash value, with the policy serving as collateral.

Policy loans typically do not require repayment, although any unpaid loan balance is deducted from the death benefit upon the policyholder’s passing.

In some cases, policyholders may choose to surrender their permanent life insurance policy in exchange for the cash value. This option provides immediate access to the cash value but will result in the termination of the policy and forfeiture of the death benefit.

Considerations Before Using Your Life Insurance

Any withdrawals, loans or surrender of a permanent life insurance policy will affect the policy’s death benefit. It’s essential to consider how accessing the cash value during your lifetime will impact the financial protection provided to your beneficiaries after your passing.

Consider your long-term financial goals and needs before using your life insurance benefits while alive. Accessing your policy’s cash value may provide immediate liquidity, but it’s essential to weigh the impact on your overall financial plan and retirement income strategy.

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While life insurance is primarily designed to provide financial protection for loved ones after your passing, certain policies offer benefits that can be utilized during your lifetime.

Understanding your options for accessing the cash value of a life insurance policy and considering the implications on your financial plan are crucial steps in determining whether to use your life insurance while you are alive.

Contact Alpine Castle Lake Insurance in Idaho Falls, Idaho, to learn more about life insurance and get a personalized quote.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.

Categories: Blog

Tags: cash value, permanent life insurance, term life insurance

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