A recent survey showed that while many Americans are aware that they don’t have enough savings for their retirement, few do anything to change this. This is where your life insurance policy comes in, making the ultimate retirement planning tool.
Increased Cash Value
While life insurance policies protect your dependents’ financial future by guaranteeing they get a payout in case something happens to you, they also help in accruing cash value. This refers to the remaining balance you’re left with after the premium payment account is deducted from the total costs. With some life insurance policies, your cash value increases over the years. Thus, by the time you retire, the cash value would’ve increased, making your life insurance policy worth more than it previously was.
If you’re in need of a certain amount of money during your retirement years, you may be able to borrow from your life insurance account. Typically, the amount you borrow can be up to as much as the cash value of the policy.
You can also use your life insurance policy to withdraw the cash accumulated over the years without actually canceling the policy. This is called direct withdrawal, and it may be used as a source of income during retirement. However, the amount you choose to withdraw shouldn’t exceed the total premium payments you’ve made so far.
That said, it’s important to note that you’ll still have to pay premiums on your insurance policy. You should also know that the death benefits may go down, being reduced as much as the amount you withdrew.
There may be another way you can use your life insurance policy for your retirement: by selling it. This comes especially handy if you suddenly require money for medical purposes and direct withdrawal or borrowing cash from your policy simply won’t be enough to cover the costs. You may urgently need a lot more money for whatever reason, and one option is to sell your policy.
By doing so, you’ll still be the person insured, but the owner and beneficiary will change. You’ll get to sell your life insurance policy to a third party who’ll then become the new owner and death beneficiary and will be responsible for premium payments. You’ll also be able to get money upfront if you sell your life insurance policy to a buyer, which in many cases can be significantly more than the policy’s cash surrender value. The payment you receive can then be used to cover your medical costs or whatever it is you needed the money for. You can even sell your policy to fund a family trip overseas or to make other investments!
Life settlements are also an option for individuals who’re chronically or terminally ill. They can opt for a viatical settlement, which works in a similar way as a life settlement would.
Sell your life insurance policy for cash through the brokers at Prosperity Life Settlements. We also offer a free life insurance settlement calculator to help you determine what your policy may be worth.
Get in touch with our life insurance settlement brokers today.