How does your Life Insurance Cash Value Build?

If you’re considering purchasing life insurance or are exploring ways to maximize the benefits of your policy, you’re likely looking to answer the question, how does life insurance build cash value? A policy’s ability to accumulate cash value over the years can provide a significant benefit to a policyholder, as he or she may be able to tap into these funds in case of emergency or can use them to pass along to heirs. While many nuances that determine a policy’s cash value, there are some standard protocols that most insurance companies follow: Term vs. Permanent: One of the first things you have to determine when looking to answer how does life insurance build cash value is what type of policy do you have? For instance, term life insurance is only applicable for a certain period of time and does not acquire cash value while permanent life insurance does. If you think you may want to take advantage of the cash-value option, you’ll need to explore the best permanent life insurance policy for you. Type of Policy: There are a number of different permanent life insurance policies that build cash value, all in varying ways. Whole life policies lock in a rate of growth, which the company and policyholder agree to and which doesn’t change, while universal policies rely on current interest rates to determine the growth. Another option is variable, in which the funds are invested and cash value grows according to the success of the investments. Premium Payments: Cash value starts to build through the policy holder’s premium payments. Typically, insurance companies divert the payments into three distinct...

How is my Death Benefit Calculated?

A life insurance policy’s death benefit can be a vital resource. In the event of someone’s passing, the funds can be used to cover final expenses, as well as to address income gaps left by the loss. Some people may also opt to draw on the value of the death benefit while they’re alive, such as through Life Credit’s Living Benefits loans, which allow policyholders to borrow against their death benefit to manage medical emergencies such as cancer. Regardless of how you intend to use it, a life insurance death benefit payout can be a significant source of financial assistance, both for policyholders and their heirs. However, it’s important to make educated and informed decisions when you’re enrolling in a policy to ensure the payout will be sufficient. While each policyholder will have individual circumstances — such as varying numbers of dependents or unique health concerns — there are some common ways to determine what your life insurance death benefit payout should be before you finalize a policy. One strategy is to add together the policy holder’s annual income, the cumulative amount that would be lost if he or she died today (presuming he or she would work through average retirement age) and burial costs. Even though this total may seem high, it allows for a worst-case scenario that would enable the person’s family to continue receiving the financial support this person had provided during life if he or she was to pass away at an early age. Once the desired amount of the life insurance death benefit payout is calculated, you can then shop around to find a...

3 Reasons Against Viatical Settlements

If you’re facing a financial crisis because of a medical diagnosis, you may be considering selling a life insurance policy. On the surface, this option may seem like the right path, if you can net enough money to pay your bills and live out the rest of your days without focusing on finances. However, for those with terminal illnesses, selling a life insurance policy through a process known as a viatical settlement can have many unintended side effects — putting your financial health, and that of your family, at risk. So just why are viaticals a bad investment? Here are three of the primary reasons to steer clear of these settlements and consider instead options like LifeCredit’s Living Benefits Loans, in which you simply borrow against — and not sell — your life insurance policy. 1. Jeopardizing Your Finances When you enter into a viatical settlement, you’re selling a life insurance policy for less than it’s worth. You’re not only cheating yourself out of that money you deserve but you may also be jeopardizing your current income. Because of the influx of cash, you may be cut off from income-based benefits like Medicaid — again, these are benefits you deserve and have paid into; however, the viatical settlement may mean this income that you likely count on could end. Additionally, you will have to pay taxes on the amount you receive in the viatical settlement, which could significantly reduce the total. 2. A Gamble with Time Those who are considering selling a life insurance policy may have received a terminal diagnosis and are likely scrambling to get their affairs...

Understanding Your Health Insurance: A How-To Guide

Health insurance for cancer patients can be one of the most significant factors that determines a person’s prognosis. It is an unfortunate reality that cancer is costly; even with a good insurance plan, cancer patients can face steep co-pays, treatment costs, and medication prices. However, health insurance can defray exorbitant out-of-pocket expenses to a degree. Research has shown that financial concerns can discourage some patients from seeking proper care, or cause them to be non-adherent to their medication regimen, putting their health and recovery at risk. While it’s a necessary part of care, understanding health insurance can seem like yet another challenge for cancer patients who already have so many other decisions and details to sort through. To ease that burden, here is a rundown of the steps cancer patients should take to ensure they’re making the most of insurance. Get insured: If you don’t have health insurance, the very first action you need to take after a diagnosis is to enroll in a plan. Visit the federal healthcare site to learn about the private and public plans that are available. If your or your spouse’s employer offers insurance, a cancer diagnosis typically will be considered a qualifying life event, so you can enroll in a plan outside of typical enrollment periods. Other options include Medicare, generally applicable to those over 65, and Medicaid, for low-income or disabled individuals. Stay insured: Cancer treatments may necessitate your taking time off of work or could even result in the loss of a job. Prepare ahead of time. The COBRA program provides temporary insurance coverage, often used by those whose employers discontinue coverage during a leave. Get informed: Learn about your...

Life Insurance Death Benefits: Pros & Cons

Claiming life insurance death benefits can be a lifesaving option for a person’s family after he or she passes away and can even be beneficial for the policyholder while he or she is still alive. When selecting a life insurance policy, it is important to consider the pros and cons of each option, especially the policy’s death benefit. Death Benefit Pros Death benefits are generally designed to help a policy holder’s beneficiaries pay for his or her final arrangements, to settle debts and, in some cases, to help them save and build wealth. Some policies also include the option of claiming life insurance death benefits through loans while the individual is still alive. That can be an effective way of paying down debts and confronting financial emergencies, such as cancer or other critical medical conditions. Death Benefit Cons Death benefits vary greatly depending on the individual’s policy. For instance, term policyholders generally cannot draw on their benefits while they’re still alive. Those who want that option would need to invest in a whole or permanent life insurance policy, which is generally more expensive as it lasts throughout the duration of an individual’s life. That means higher premiums each month, which can be challenging for many, especially those who are just starting out. Another Option Those considering the best options for claiming life insurance death benefits can also explore avenues like Life Credit’s Living Benefit Loans. This program allows policyholders—regardless of whether they have term or whole life insurance—to borrow against their policy’s death benefit to address immediate financial concerns. Individuals can receive up to half of their death benefit,...

Can Life Insurance Cash Value Help Cancer Patients?

Are you considering whether your life insurance cash value can help you confront a medical crisis like cancer? You’re certainly not alone. Many cancer patients are facing significant financial burdens, and life insurance can be one way to overcome some of those obstacles. First, it’s important to understand the basics of how life insurance builds cash value. Understanding Your Life Insurance Policy’s Cash Value One of the major differences between whole and term life insurance policies centers on cash value. Term policies are applicable for a set number of years and do not accumulate cash value. Once the term has ended, the policyholder does not have any coverage and cannot draw on any of the premiums he or she paid throughout its duration. Whole life insurance, on the other hand, is active throughout an individual’s life and builds cash value over the years. So how does life insurance accumulate cash value? A policy’s value grows as the individual pays the agreed-upon premiums. A portion of the premiums goes to the person’s death benefit, which will be paid out to survivors after he or she passes away, and a portion is set aside as the policy’s cash value. How Can Life Insurance Help Me as a Cancer Patient? If a person chooses a payout or to sell a life insurance policy, he or she will only get the life insurance cash surrender value. Often, the surrender value is lower than the actual cash value of a policy, so the holder will not truly be getting back what he or she put into it. Sometimes, cancer patients may settle for this...