CHICAGO, June 28, 2022 (GLOBE NEWSWIRE) — One advantage of getting a life insurance policy is the death benefit. This helps loved ones replace the policyholder’s income and pay off debts if the policyholder passes away during the policy term.
However, life insurance policies can also offer living benefits while the policy is in force. These benefits can help the policyholder make the most of their premium payments. This article will dive into how life insurance with living benefits can help policyholders while they are alive and the policy is still outstanding.
1. Cash value withdrawals
Cash value is a growth component of permanent life insurance policies. Part of each permanent policy premium goes into this component, which then grows tax-deferred at a certain rate depending on the permanent policy type.
Once the cash value grows large enough, policyholders may be able to withdraw funds from it for any use, such as emergencies, large purchases, or college tuition for their children. Keep in mind that proceeds above the policyholder’s basis, or the amount initially invested, may be taxable.
2. Taking out loans against the cash value
Policyholders can also borrow against their cash value when it grows large