Many people think the only benefit from life insurance is that their family receives money when they pass away. That is one of the benefits and it’s definitely an amazing benefit! But, it isn’t the only benefit. Right now, I’m going to not focus so much on the value that life insurance gives to those when you’re no longer around. But more on the benefits that you yourself can benefit from while you’re still alive & well! So here are just a few, let’s get into them!

Building Cash Value

There are multiple different types of policies that build cash value that a person can access while they’re still alive – my 2 favorites are Whole Life and Indexed Universal Life. The cash value of a Whole Life Insurance Policy grow at a guaranteed fixed rate and an Indexed Universal Life Policy grows based on the way a stock market index performs. Often with IULs, you have what’s called a 0% floor meaning that if a stock market index has a horrible year, your cash value neither increases or decreases. On down years, it won’t perform as well as the guarantee that Whole Life provides but on up years, it can grow quite a bit! There is typically a cap on the interest though which varies depending on the company and particular product.

Accelerated Benefit Riders

If you become critically, chronically, or terminally ill while you’re alive, you can get access to a portion of your death benefit in advance while you’re alive. This is a huge and often overlooked benefit! In many cases, this can prolong your life or even save your life. And if you’re terminally ill, you can actually use that money to enjoy the time that you do still have. You could take trips to see family/friends, you can spend more money on treatment methods you may not otherwise be able to afford, it gives you options. It can also act as a sort of a supplement for your health insurance and cover some gaps for things like long-term care. And the costs of long-term care are very expensive and only going up with inflation.

Become Your Own Bank

The Infinite Banking Concept was first coined by Nelson Nash. Many people have been taught that the best and safest place for your money is a savings account. But that’s simply not the case. I’m not sure what the banks are offering where you guys live…but here in Omaha, NE you’re lucky to break 0.5% or 0.6% interest on your money. Omaha, Nebraska is one of the more affordable places to live in the country but that’s still not even close to keeping pace with inflation and the rising costs of living!

With the Infinite Banking Concept, the idea is that instead of putting your money into a bank, you put it into a what? You guessed it! A life insurance policy. Not just any life insurance policy though..and here’s where there’s a lot of confusion around the value of life insurance and where a lot of the misinformation comes. It MUST be a permanent policy, not a term policy. Unless the term policy is set up with the option to convert it into a permanent policy. And not only should it be a permanent policy, it should be one that is structured properly to maximize the amount of cash value it builds over time. Term policies have their place and are great for mortgage protection or getting the highest death benefit for a specified number of years at the lowest cost. However, that’s not the focus of this article. And they won’t allow you to become your own bank like I’m talking about right now.

Instead of earning a measly 0.5% return on your money, a life insurance policy can often offer a guaranteed return of 3-5% annually. One of the craziest parts about it is this…let’s say for instance that you want to go buy a house and take out a down payment of $25k to do so. You have the option to repay the policy loan that you took out from your life insurance or you could choose not to (it’s good to talk to an expert to help you decide the benefit of each scenario). But IF you do choose to repay the policy, that $25k you borrowed from your policy still grows that entire time as if you had never taken it out! You also get ALL the other benefits of life insurance that you don’t get from your money just sitting in a bank like a death benefit, those accelerated benefit riders we talked about above in the case of emergency, disability income which we’ll get into, and more!

Life insurance is often referred to as the “AND” asset. It’s NOT the thing that is going to make you rich tomorrow and it’s certainly NOT the only way to build wealth. It’s NOT your golden ticket to fix all your financial worries. But what it is, is a tool that will enhance your overall financial and wealth building strategy. A tool that will work alongside the other things you’re doing to build a better future.

Life Insurance Policy Options: Disability Income Riders

In the event that you become disabled and unable to work, there are riders that are included in life policies or added if you select them and they will provide income for you. Typically, they’ll pay into retirement or for a specified number of years.

Life Insurance Policy Options: Disability Waiver of Premium Riders

Similar to the rider above, these riders will kick in when you become disabled. Your policy premium for your life insurance will be waived and it’s typically until around the age of retirement as well or for a set number of years that’s specified when you apply for the policy.

Peace of Mind

This is a huge one but people don’t often think about it! There is a great sense of security & peace of mind that comes from knowing that if anything were to happen to you TODAY, your family will be ok. Whether you’re single and not even thinking about all that or you have a family that’s on your mind CONSTANTLY, life insurance can AT LEAST alleviate the financial burden that comes from someone passing away. Even for myself, as a younger single guy, I still find great peace knowing that my family won’t have to come out of pocket for my funeral/final expenses that are often $10-$20k or more.