4 Special Benefits of Life Insurance that You May Not Know
The best you can do for your family is provide a safety net in event of premature death or retirement, with an investment in life insurance coverage. However, you can do more with life insurance than you actually think, especially when life hits you hard with unexpected setbacks.
When you are armed with the facts it becomes easier weighing in on the benefits of life insurance. Take for instance the following scenarios where the right policy can help you out:
When You Have Lost Your Job
Job security these days is as good as your employer’s word – it’s uncertain and a cause of worry for many people. There’s no telling when the company will consider a job cut, and people have often been denied their severance package or compensated only a fraction of what they used to earn when employed. That could be you.
You can survive for a while if you’ve planned ahead with an emergency fund, but what if you haven’t? In a situation like this, borrowing from your life insurance policy might be the only option left. It will give you time to look for another job without worrying about how to stay afloat.
When You Are Temporarily Unable to Work
It rarely comes up in a tech-powered economy like ours, but temporary disability is always a possibility. Some companies offer disability insurance so employees are assured of a financial reprieve in case of a temporary disability. Usually, most policies will cover up to 70% of your regular paycheck, to help you make ends meet in case of serious illness/injury.
In the absence of an employer-provided or personal policy, you’ll be hard-pressed for financial recovery during the period when you can’t work. Here, you’ll find your whole life insurance plan a godsend, since it allows you to borrow at cheaper rates than bank or credit institutions so you can meet expenses while you recover.
When You Need to Purchase a Home
Buying a home is one of the crucial financial decisions for most people, but also one of the most challenging undertakings for the average person. It is a cash-intensive venture, especially when you factor in the down payment and closing amount. This typically adds up to a large amount for a single person or family to raise for that matter.
Your savings might see you through the house buying process if you have a substantial amount, but you can top them up with borrowings from your whole life policy if they fall short. This helps you quicken the process of getting your own home.
When You Want to Start a Business
Let’s face it, no one likes hearing orders being barked to them or working for someone else. Some take the leap into running their own business, and if you’re willing to risk starting a business then you know it does not come cheap. It requires a considerable amount of capital to get a business off the ground.
If your savings don’t cut it or you’re afraid of borrowing against them at the bank, your whole life insurance policy offers the perfect solution. Unlike other credit forms, interest is lower on borrowing from a life insurance policy, and you can pay it back when the business picks up.
The Pros and Cons of Life Insurance Loans
The first thing you need to keep in mind is that loans can only be taken against permanent or whole life insurance plans. If you’ve opted for term insurance, this isn’t an option. Ordinarily, whole life insurance is regarded by many as an expensive venture, but in reality it’s not considering the high stakes involved in the long run and the benefits it offers.
Since you pay higher premiums, the amount of money above the death benefit (face value) is invested by the insurance provider. This builds a tax-free cash value, which you can withdraw or borrow against. Additionally, you are not obligated to repay the loan (although not doing so will reduce the death benefits of the policy).
To learn more about how to use life insurance as a financial solution for trying times, consult LifeCentra’s experienced advisors today!