February 2018 - Life Credit Company

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...