The benefits of life insurance are innumerable — from the peace of mind you get knowing you can protect your loved ones in the future to the immediate financial assistance that a policy can generate in an emergency, such as through a Life Credit Living Benefit Loan. With so many advantages, however, comes complexity, as there are myriad policies and ways in which they can be maximized. To navigate that confusion, there are some life insurance terms to know that, once you’re familiar with, can build a foundation to help you determine the best way to buy and use life insurance.
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Life Insurance Terms to Know
Dividends: If you have what is known as a “participating policy,” you may be eligible for a portion of the life insurance company’s profits, which are known as dividends. You can apply them to your premiums, take the dividends as cash, buy additional insurance or many other options.
Cash value: This refers to the value that has accumulated in a permanent, or whole life, policy. As you pay premiums, a portion of each is set aside to generate cash value that you can later borrow against or, depending on your policy, withdraw.
Beneficiaries: This is the person or persons who will receive the death benefit associated with your policy after your passing. You can name one or more individuals, and should periodically revisit the beneficiary list.
Surrender value: The surrender value refers to the amount you would get if you opted to cash out your policy, as the insurance company may levy hefty surrender fees, significantly lowering the cash value.
That’s why many people with a financial emergency may consider other options, such as a Life Credit Living Benefit Loan, where you borrow against your policy’s death benefit but don’t cash it out. With this approach, you still retain ownership of your policy but are able to tap into its value to address pressing financial needs.
Contact Life Credit to learn more about your options and find out if you qualify today!