Whole Life Insurance And Living Benefits
While life insurance is known for providing a death benefit to beneficiaries after the policyholder dies, it can also offer benefits while you are alive. These are called living benefits and are typically provided via riders that you pay extra to add onto your policy. Some whole life policies have this feature built in without any additional riders.
Depending on the type of policy and the specific rider you select, living benefits can provide access to funds from your death benefit while you are still alive to help with medical expenses or even supplement retirement income. They may also help cover costs associated with terminal or chronic illness, like hospice care, home care, nursing homes, and in-home caretakers. The trade-off is that the amount you withdraw through living benefits will reduce the death benefit your beneficiaries will receive after you pass away.
If you are looking for a permanent life insurance option that offers tax-advantaged cash value accumulation, consider the indexed universal life insurance (IUL). This policy is more complex than term life and may not be right for everyone. A knowledgeable insurance professional can help you decide if an IUL is the best fit for your family’s needs.
Besides offering permanent coverage, whole life insurance is one of the only types of life insurance that builds cash value while you are still alive. This cash value is based on a formula that can include interest rates, market returns, and other factors, and can be used to pay your premium or as an investment fund. The more you invest in your policy, the higher your cash value will be and the lower your premium will be.
Whole life insurance is a popular choice for those who want to build cash value, as well as those who need to plan for long-term care. Some living benefits riders can be incorporated into this type of policy, including a terminal illness rider that allows you to withdraw a portion of your death benefit while you are still alive and a waiver of premium rider that pays your premium if you become disabled or unable to work.
Regardless of which type of life insurance you have or the living benefits riders you choose, you can rest assured that your family will be financially protected after you pass away. Contact a Guardian financial professional to learn more about life insurance protection and how we can help you plan for your future.