Using a life insurance policy while living
Life insurance is a financial product that is designed to provide financial protection for your loved ones in the event of your death. It is intended to provide financial security and peace of mind to those who are left behind by covering expenses such as funeral costs, outstanding debts, and daily living expenses.
But can you use life insurance while you are still living? The answer is yes, in some cases. Here are a few ways that you may be able to use life insurance while you are still alive:
- Cash value: Some life insurance policies have a cash value component that allows you to borrow against the policy or withdraw funds while you are still living. This can be a useful source of emergency funds or a way to access money for a large purchase, such as a home or education expenses.
- Long-term care: Some life insurance policies offer long-term care benefits that allow you to use the policy to pay for assisted living or nursing home expenses if you become unable to care for yourself due to a chronic illness or injury. Typically, you must be unable to perform two out of six ADLs, which include independent bathing, continence, eating, getting dressed, using the toilet, and getting in and out of a bed or chair.
- Accelerated death benefit: In the event that you are diagnosed with a terminal illness, some life insurance policies allow you to receive a portion of the death benefit while you are still alive. This can help to cover medical expenses and other end-of-life expenses.
It’s important to note that not all life insurance policies offer these options, and the terms and conditions for using the policy while you are still living will vary. You may receive living benefits in a lump sum, or you may be able to access them as needed. Your life insurance policy will probably limit the total amount of funds accessed to 80% of your policy’s death benefit. It’s a good idea to review your policy carefully and consult with your insurance agent or financial advisor to understand what options are available to you.
Overall, life insurance is a valuable financial tool that can provide financial security and peace of mind for your loved ones in the event of your death. While it is not intended to be used while you are still living, some policies do offer options for accessing funds or benefits while you are alive. It’s important to understand the terms and conditions of your policy and to consider your financial needs and goals. Drivers Legacy, as a leading independent insurance agency, can help you explore your options and find the right life insurance policy to meet your needs.
