How to use life insurance while alive

life insurance comes Various types and sizes. Depending on your personal financial situation and long-term goals, you may benefit from one duration, complete, public or changeable policy

Although life insurance is often thought of as something you keep with you Beneficiary After you die, there are ways you can use your life insurance while you’re still alive. This can be used Pay off the debtto do Mortgage payments Or just to help with major expenses.

But not every policy allows you early access. If you want to include this capability in your plan, you need to do your homework first.

If you’re in the market for life insurance, start by getting a free price quote so you know exactly what to expect.

How to use life insurance while alive

You can potentially tap into your life insurance while you are alive. Here’s how:

Get a whole life insurance policy

Whole life insurance is a form of permanent life insurance (such as universal and variable life). A permanent life insurance policy will allow you to access the cash portion of your account while you are alive.

Term life insurance, meanwhile, does not have a cash component for policyholders to access. So, if you plan to use your life insurance as a backup cash asset, you’ll want to avoid term policies.

Just note that, due to the cash factor, Whole life insurance policies are generally more expensive than term plans. And you won’t have immediate access to cash once the policy goes live. You will need enough cash in your account before you can use it (and it takes time to build it up).

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Surrender your policy

Assuming you have a policy that has a cash component, you can then surrender it and withdraw the entire cash value that exists. Again, this assumes two things: that you have a policy that has cash, and that you’ve built up enough cash in the policy over time to actually have something to take out.

If both of these qualifications aren’t met, you won’t be able to use your life insurance while you’re alive – or you’ll have to wait until you have enough money to withdraw.

Borrow from your policy

If you don’t want to surrender your policy completely, you may be able to take out a loan against the existing cash amount. Just understand, if you go this route, the amount you owe on the policy’s outstanding principal (and interest) will be deducted from the death benefit before your beneficiaries receive it.

Still, it can be a better option than going to a bank or taking one personal loan Because your credit will not be checked to receive the funds. You’ll probably get better repayment terms.

Bottom line

It is a popular one hearing That you cannot use your life insurance while you are alive. Not only can you potentially use it, it can also be a better vehicle than other traditional cash options. The benefits provided by a life insurance policy will vary based on the type of policy and the options you choose when purchasing your coverage.

If you’re interested in the benefits this option can bring, get started by getting a free price quote.