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Using Life Insurance as a Financial Tool

Financial tools like the 401(k) or Roth IRA are widely known, but few people have heard of the many ways life insurance can be used as a financial tool as well. Life insurance was established to protect families from worst-case scenarios, but they have also changed a lot since then. For example, not only does life insurance help you protect your legacy after you die, but it can also be used while you are alive, and even protect your money during a market downturn.

Our world is always changing, which is why flexible financial solutions are essential. Here are all the different ways life insurance can help you:

To Build a Legacy

The simplest form of life insurance is the term life policy, but even at its most basic, life insurance proves it is essential — the best policy is usually the one that’s in place when you need it. Term life coverage comes in 10–, 20– or 30–year plans that provide your family with a death benefit, or a payout to cover their expenses should you pass away. The earlier you get cover, the cheaper it is, so if your biggest priority is providing for your loved ones, you ought to look into term life coverage today.

To Protect Your Wealth

Another way life insurance can be used is through an indexed policy. These special products use an investment strategy called indexing to credit interest on your policy as it ages. This means indexing protects you against market volatility — if the market goes negative, your interest rate never dips below zero, unlike some other investments.

Over time, you can borrow against the cash value in an indexed policy so you can get the most out of the accumulated wealth in your account. This borrowing can be done whenever you may need it; upon retirement, you can even take distributions of your cash value with tax advantages. These kinds of policies are essential if you want to take advantage of things like compound interest, tax advantages and market protection.

To Improve Your Quality of Life

Life insurance policies can also feature Accelerated Benefits Riders (sometimes known as living benefits) that you can use to access part — or all — of your death benefit while you are still alive. These benefits can be used if you have a qualifying terminal, chronic or critical illness. If you qualify, you can use your money while you are still alive, and for any reason: medical expenses, in-home care, bills, childcare, college tuition and more.

Life Insurance is a Tool for Peace of Mind

Life insurance still exists for its primary purpose — to ensure financial security and put a legacy in place for your family — and it excels at these roles. But it is important to know all the different ways life insurance can help you as a financial tool. Whether it is through living benefits, market protection or more, life insurance remains a flexible financial tool to give you peace of mind.

Check out our website for more information about our products or to get expert financial advice on your life insurance options.


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