Can Term Life Insurance Have Cash Value?

When an unexpected financial challenge hits, many questions may abound: Should you tap into your savings? How can you access cash without getting into too much debt? Can you borrow from your life insurance? That last question is a complex one, as there are many types of life insurance, and different ways to use your policies. Many people view life insurance as a long-term solution, often just to be passed down to future generations. However, there is the potential for life insurance policies to have cash value that can be of vital assistance in a financial pinch, like those often faced by cancer patients. Before delving into this topic, policyholders need to first determine the type of coverage they have. Whole, or permanent, policies protect the holder for the entirety of his or her life, and accumulate cash value that can be borrowed against. The more you pay into the policy throughout your life, the more cash value it ultimately has. Term insurance, on the other hand, is designed to only function for a set amount of time; unlike whole coverage, term does not accumulate cash value. If the set timeframe expires, the policyholder does not have access to any of the premiums he or she paid throughout its duration. However, there are some exceptions to this structure, such as Life Credit’s Living Benefit Loans. Life Credit pays up to half of a person’s death benefit on his or her life insurance policy, regardless of the type of policy. Even if you are a term policyholder, you can borrow from your life insurance, if it has a value of...

What is a Living Benefit on an Annuity?

Preparing for your financial future involves considering not only the exciting ways you want to spend savings, but also how you might grapple with challenges, such as a medical crisis. Living benefit loans are one option that may arise in your decision-making process, with many financial products, such as annuities, often offering such policy add-ons. Living Benefit Annuity: How it Works An annuity is a collection of investments, which can often be diversified to maximize the returns. As part of the portfolio, an annuitant may be able to opt for a living benefit, meaning he or she can draw cash from the value of the annuity if needed. However, there are a number of factors to consider before doing so. Typically, the policy holder must invest a certain amount in order to guarantee he or she will receive a set living benefit, no matter how the investments perform, which may require a significant amount up front. Additionally, most annuities charge fees for choosing the living benefit feature, which may be paid on a yearly, quarterly or monthly basis, depending on the agreement. Living benefit annuities typically are divided into the initial investment, known as the income base, and the value of your investments, called the account balance. Investors can withdraw the account balance at any time, but will incur hefty fees; the income base, however, can only be drawn upon if it’s converted into incremental amounts to be paid out over the remainder of one’s lifetime. In other words, a living benefit annuity may be a good option for those planning for retirement and those who have a nice...

Can you Take Out a Loan on a Term Life Insurance Policy as a Cancer Patient?

When it comes to life’s most expensive moments — college, a wedding, buying a house — many people turn to loans. Loans can also be used for not-so-happy moments, such as a medical crisis like cancer. With treatments, medications and lifestyle changes like lost wages, cancer financial assistance is vital for many patients, some of whom consider borrowing against a life insurance policy for some quick cash. There are a number of options for life insurance loans, which depend on the patient’s particular policy, as well as the details of his or her prognosis. A Different Approach to Borrowing Against Term Life Insurance Some life insurance companies will allow clients to draw on the cash value of their policy as a form of financial aid for cancer patients. The patient will be responsible for paying the loan back to the company, often at an interest rate of 5-9 percent. However, that option is only available for those with a permanent policy, or one that covers the policy holder for life, while term holders, those whose policies are designed for a set period of time, are ineligible. Even though term holders may have paid a significant amount into their policies, they’re not able to access that money in an emergency. Life Credit Company takes a different approach to life insurance...