I keep hearing about new life insurance products and something called Living Benefits. What does that term mean and do you recommend them?
Life insurance products can do more to leverage your money and strengthen your financial position than most people realize. Today’s newer policies have adapted to the need for more safety and protection as people are living longer and enjoying healthier lives. Living benefits in particular speak to the need for increased access to funds in the case of critical illness and long term care.
They allow you to access the death benefit guaranteed by your policy before you die, which is why they are sometimes referred to as Living Benefits.
Here is how Living Benefits work:
You can fund the policy over time or with a single lump sum
There are two ways you can invest in a life insurance policy with Living Benefits. They can be funded with regular payments over a period of time, such as 10 years, which is a good option for younger families or even middle-aged couples who are planning ahead and thinking about retirement. Or, you can fund a policy with an existing pool of money, rolling over a lump sum such as from an IRA.
LIVING BENEFITS: The money either goes to you or to your loved ones
Traditional long term care insurance policies are designed to provide comprehensive coverage in the event you or your spouse need long-term care, but they have one glaring drawback: if you never need care, the money you pay into the policy reverts back to the insurance company. Because of this, many people avoid preparing.
With Living Benefits, you are able to address the risk of death and long-term care with one policy. Should you need long-term care in the future, you have a pool of money which you can rely on. If you never get sick and never require care, the money stays in the policy. When you die, your beneficiary receives the full death benefit, which is usually a greater amount of money than what was originally paid into the policy.
The money paid out from a life insurance policy is tax free
Money paid out from a life insurance policy offers you and your loved ones a tax-free source of income. The money paid out to you in the form of Living Benefits does not have to be paid back, but it does decrease the amount of the death benefit.
Bottom line: Life insurance policies with Living Benefits give you tax-free access to your money while you are still alive to help pay for the expense of long-term care; they also pay out a tax-free death benefit to your beneficiaries.
Do you have a question about Living Benefits, success with money, your business, or life? You can ask Beau anything by visiting AskBeau.com and sending your question(s) in to RichLife HQ!