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 option in order to get a quick lump sum of cash to help pay for critical medical treatments.
Life Credit takes a different approach. Through its Living Benefit Loan program, cancer patients and seniors can get up to half of their policy’s death benefit, but instead of selling the policy, they’re borrowing against it. Once the loan is repaid, they again take ownership of it and can reap the future rewards. While a quick cash payout is tempting, options like Life Credit allow policyholders to both address their immediate financial concerns and still protect themselves and their beneficiaries in the long term.