Life insurance can provide protection in a crisis, but did you know you don't have to die for somebody to use it? At least not if you pick the right type of policy.
"There are a lot of policies that now have living benefits that allow you to access the money during your lifetime," said Brian Levy with BML Wealth Management. "You can use the death benefit during your lifetime to potentially pay for healthcare, chronic illness, terminal illness - those types of things."
Here are the four main types of life insurance most people will deal with:
- Term life insurance offers a fixed amount for a fixed amount of time if you die.
- Whole life insurance lasts your entire lifetime and it builds a cash value.
- Universal life insurance allows you to adjust your premiums and also has a cash value.
- Variable life insurance is tied to investments such as bonds and mutual funds. It comes with a cash value and the death benefit is guaranteed.
A policy with a cash value can offer you a lot of options.
"You can access that money during your lifetime and, in a lot of cases, you can access that tax-free," Levy said.
Term life insurance policies can give you immediate money, too - if you don't mind somebody betting on you passing away.
"You can actually go out in the secondary market and see if someone is willing to buy the policy from you. So they'll buy it from you for more than the cash value you have, potentially. And ultimately, they retain ownership and they're the underlying beneficiary at that point."
There are plenty of options and many are also tax-free. For many investors, that's reason enough to invest in life insurance.
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Correction: An earlier version of this story incorrectly referred to the financial planning company as BLM Management.