A life insurance policy may meet more of your financial needs than you think.
While we tend to think about life insurance as an income source for our family when we die, there are other uses that may benefit your larger financial plan. “One of the biggest misconceptions is the idea that life insurance is only about the death benefit,” says Cindy Campbell, Private Wealth Strategist at Regions Bank. “Many people see life insurance only as an expense because of the premium payment, but it can also be an asset.”
Here are some ways life insurance may meet your financial needs.
Long-term care
A 65-year-old has a nearly 70% chance of needing long-term care services at some point in their lives. Many insurance policies offer riders that allow the living policyholder to tap into their death benefit to pay for those expenses, Campbell says.
Big expenses
You may be able to borrow against a policy’s cash value. “You can use this to pay for a big or unexpected expense, like a car or a wedding or a health issue,” Campbell says. If you die before paying the loan back, the value will be deducted from the death benefit.
Retirement income
Some policies build up cash value that can be used for supplemental income in retirement. While drawing from the policy often decreases the death benefit, that may be fine since you may need a smaller benefit once children are grown and your life changes.
Tax-free income to heirs
Take advantage of the tax efficiency of life insurance policies. “When a beneficiary receives a death benefit, it’s not taxable income,” says Campbell. In that way, the money you invest into your policy’s premiums may benefit your overall estate plan.
A succession strategy
Business owners can use a policy to protect their interests in the company. Campbell says, “Each owner can have a policy on the other owner, and if one dies, the policy proceeds can be used to buy out that ownership interest.”
Talk to your Regions Wealth Advisor about:
- Who else in your family might need a policy—and why.
- Help matching policies to your needs.
Interested in talking with an advisor but don’t have one?
Find a contact in your area.
