Everybody knows that life insurance is a way that people use to protect their loved ones just in case the individual were to pass on unexpectedly. Life insurance is bought by all kinds of people from all sorts of demographics. But life insurance can do more than simply provide a death benefit for people you care about. These are powerful and flexible packages, with potential features that many people aren’t aware of. Here are 3 of the best uncommon ways that life insurance can be used.
To Get a Loan – You can use term life insurance to secure an SBA loan. Many banks require this step for certain kinds of loans, and at times a borrower may be able to get a loan they would not otherwise qualify for because the death benefit acts as collateral. The death benefit, in this case, would be large enough to service the entire balance of the loan. The life insurance term will expire at or after the term of the loan in question. There are many other ways to get a loan, and many other purposes for term life insurance. But if you’re ever in need of a loan and are finding it difficult to secure through other methods, this is a great tidbit to remember.
As An Investment Account – Amateur investors have at least one common tax-protected retirement savings/investment opportunity in traditional and Roth IRAs. These relieve tax obligations either when the money is deposited or when it is eventually withdrawn. People in the working world may have access to a 401(k) or other investment account made available through various workplaces, sometimes with matching funds. For people who have access to only one of those, or who always make the maximum contributions to these accounts while having more to invest left over, whole life insurance accounts may provide yet another tax-protected investment opportunity, to grow the eventual death benefit and/or to increase wealth that will one day go to a cause or to family or loved ones.
To Get Cash Flow – If you have a life insurance option that allows for investment, you’ll eventually be able to borrow against the balance (paying the company back with interest) or withdraw money from your balance (including returns) to pay for something or to act as regular income. This is similar in some ways to the investment option mentioned above, but it’s a distinct behavior that would be available to the investing life insurance holder, but which might not be immediately obvious to someone considering this form of insurance.
Life insurance is pretty much a necessity for most adults. Some may have good reason to choose against it, but there are so many benefits to having life insurance that more people should really know about. Life insurance can provide peace of mind and security for your loved ones at some future time. Find out other ways to make the most of your policy and you’ll be able to set up a plan that works for your unique needs.