When most people think of Life Insurance, they’re thinking of financial security for their loved ones.
They’re thinking of a way to support their loved ones, and keep them comfortable in the event that they are no longer able to provide for them.
In truth, however, the financial safety net that Life Insurance provides is just one of ten different ways that you could be using your policy.
Here are the many uses that you could (and should) be putting your policy to:
- A Life Insurance policy can provide ample survivor income
Let’s get the most obvious one out of the way first. Your Life Insurance policy would certainly replace the income that your family and loved ones would lose, should anything happen to you.
The amount of cover is something you would work out with your Life Insurance Advisor based on your lifestyle, income, expenses, your estate and savings, and other factors.
You can even use a host of online calculators to help you arrive at this number fairly quickly. This shouldn’t take you over 3-4 minutes. Here’s a life insurance calculator by Life Happens.
- A Life Insurance policy can help equalize your estate
Life insurance policies can play a vital role in ensuring all your inheritors get equal shares of your estate, without you having to liquidate your assets or your business to balance things out.
Here’s one such case where life insurance was used to help equalize inheritances in a stepfamily.
- A Life Insurance policy can help to pay estate, capital gains, and income tax
A tax-sheltered insurance policy can pay out a sum to your inheritors to help cover estate and capital gains taxes, and any other tax liabilities that they face as a result of inheriting your estate.
- A Life Insurance policy helps with wealth preservation, generation after generation
Over time, wealth devalues or starts to dry up, if it’s getting used up at a faster rate than it is regenerating. With inflation and rising lifestyle standards of a younger generation, families often find themselves in need of a solid financial planning and wealth preservation tool.
Life insurance can help to protect the family business (in the event that it loses one of its key founding partners or managers), it replaces lost income and it can help to manage the distribution of inheritances to ensure longevity and returns on the family estate.
- A Life Insurance policy facilitates wealth transference
Your policy allows flexible transfer of wealth – be it the cash value of the policy from the accumulated premiums, or the payouts from the policy. Both can be transferred and accessed by you and your family anywhere in the world.
- A Life Insurance policy is a safe, diversified investment tool
Unlike other assets in your investment portfolio, a Life Insurance policy isn’t affected by the volatility of say, the property market, or stock market movements. When you buy a Whole Life Policy, your family is assured that payout, as long as you you’ve continued paying premiums over the term.
- A Life Insurance policy can serve as a tool for eternal charitable giving
You can use a Life Insurance policy to create an eternal gift – one that never stops giving towards the charities and causes that you support, even long after you’re gone. Here’s how.
- A Life Insurance policy serves as a savings vehicle
Once you commit to a Life Insurance policy and pay in those monthly premiums, that’s all money that’s going straight into a savings account that you can access in the form of cash value.
- A Life Insurance policy can protect your business in so many ways
You can use a Life Insurance policy to insure the life of business partners, or even key persons in your organization, providing the business with the financial safety net it needs, should anything happen to these key players in the business’ profitability.
- A Life Insurance policy can help to pay for loans and liabilities
Your Life Insurance policy allows you to borrow against the accumulated cash value. This means that in the face of business or personal debt, or unexpected expenses, you can draw from your policy’s cash value.
Borrowing affects the final payout on your policy, so you’d essentially be taking a loan from yourself. But that’s in place of an interest-laden borrowing from an institution. In addition, your policy can also be used as collateral against loans and may help you to when securing a mortgage or a loan from third parties such as banks and other institutions.
And that’s 10 ways to use your Life Insurance policy. You probably haven’t even thought Life Insurance could address some of these issues, but truly, it doesn’t even stop at these ten applications.
Life Insurance policies can serve as flexible financial planning tools, and over the years, I’ve helped clients to address some formidable issues by putting in place the right products and solutions to meet their needs.
Feel free to leave me a comment below, or drop me a LinkedIn message if I can help answer any questions about your Life Insurance policy, or help you to put your existing policies to new and different uses.
Like most other tools, when it comes to Life Insurance, it’s a matter of how creative you can get with it.
