Imagine waking up in a hospital; not knowing where you are. Your spouse is by your bed and tells you about the horrible accident. Lucky to be alive, your prognosis is good. However, you will be laid up for at least six months before going back to work can be considered.
The thoughts run through your head. Will I get back to normal? Does my health insurance cover everything? My income will drop like a rock. What can I do about that?
Suddenly your life insurance agent pops through the door with a smile on his face.
“Remember that policy I convinced you to buy last month? Well, it had ‘Living Benefits’. Here’s a check for $250,000.00 to help you get through all this.”
It can happen and has happened. There is modern life insurance that you do not have to die to use. This is pretty new. The benefit is not; but, including it in a Life Insurance policy, usually at no extra cost, is new.
Planning for medical emergencies is essential. A 2009 Harvard University study found 62% of family bankruptcies were because of medical bills. 78% of those people had some form of health insurance. Health insurance does not cover it all. Your doctor might recommend uncovered procedures. There can be unexpected travel expenses for you and anyone who goes with you. The time to recover and recuperate can take a long time without income.
With one of these policies; injury in a car accident, cancer, a stroke, or some other illness triggers a “Living Benefit.” The insurance company pays a large chunk of your death benefit, before you die, to help with these emergencies.
Gratuitous Picture of Me With My Great Nice Amelie
LIFE INSURANCE TO PROTECT MANY THINGS
Life insurance companies create new ways policies to help you, your family, even your kids. State Insurance Commissioners regulate them. These regulators make them keep reserves. This makes sure a person who bought a contract does not lose their money. Your premium payments and the interest they earn are safe. Cash growth builds up inside the policy contract by various methods. What you are saving is safe. Just do not direct your money to go into stock market based mutual funds.
DEATH BENEFITS
Life insurance classically provides a death benefit. This protects a family that loses the income earner.
- The mortgage on the family home still gets paid.
- Kids go to college after all.
- Surviving Spouses do not become poor.
- During life the insured has peace of mind they provided for their family.
CASH SURRENDER VALUE
Cash surrender value builds up in “permanent” policies. It performs double duty by 1.) Paying costs of the death benefit, and 2. Creating a savings plan. Families get access to this money in several ways.
- While unwise, you can cash in the policy. However, that loses the death benefit. Better choices exist.
- The Life Insurance Company will lend you money. Cash surrender value secures the loan.
With proper caution, this benefits the family when cash is needed for
- Emergencies;
- College Expenses;
- Weddings;
- New Cars; and
- More
Death benefits are not risked with loans if you do them right and pay the money back.
- “Accelerated Death Benefits” might be available for needs of a terminal illness or need for long term or nursing care. The company advances some money to you that you can keep. It is not a loan. However, it reduces the death benefit that remains.
- Many create a good retirement income properly building the cash surrender value. The “loan” technique can result in retirement income that is income tax free. If done right, the loans do not need to be paid back.
THE VALUE OF LIFE INSURANCE WITH “LIVING BENEFITS”
Most of us cannot afford Disability Income Replacement Insurance or Long Term Care Insurance. Those policies are expensive and money down the drain. “Living Benefits” included in Life Insurance Policies deal with those issues after all; usually at no extra cost.
In the meantime, our friend in the hospital from the car accident? He gets all the therapy he needs and round the clock nurses so his spouse can work. We do not want to be in his position. But, if we were, we would also want “Living Benefits”. It is the new, usually free, part of life insurance that also protects our families in medical crises. Whether protecting family, planning for retirement, or making sure you have money if you face an unexpected financial emergency; life insurance with “Living Benefits” can fill the bill. Check if your policy has the benefit. If your policy does not have “Living Benefits”; it is worth trying to make the change.
Please let me know if you have any questions. This site is to guide you to complete what is necessary so your legal and financial Dominoes are in order.
I look forward to working with you.
Scott F. Barnett, J.D., LL.M. (Taxation)
This is all devoted to guiding you to complete your own Retirement Planning, Estate Planning and Closely Held and Family Business Planning; and you gaining the Peace of Mind that comes from knowing your own future is secure and your family is protected. I help you by coaching, not teaching, so you can complete the work you need to do.
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