Could you use life insurance as an investment to help secure your financial future? That’s something you might want to ask a leading expert in life insurance investment strategies like Union Risk Services. Expert input might be invaluable because for this investment to give you a return, you’ll have to optimize how much you can make and choose the right policy.

Let’s delve into using policies like whole life insurance as financial assets.

What Is Whole Life Insurance?

Whole life insurance is a type of end-of-life security that doesn’t expire until the policyholder’s death. If you pay the premiums, the policy covers you until you die. By contrast, term life insurance expires after a predetermined number of years.

Your premium tends to increase as you age, with inflation, or as you develop chronic health conditions, and you usually pay them monthly. These premiums accumulate as a tax-deferred cash value, so you only pay tax on the money you take out. Since this is typically at your death, your estate will pay this tax as part of wrapping things up.

The value of your account won’t change with market fluctuations. Plus, after your premiums equal the value of your policy, you may start receiving additional dividends.

Benefits of a Whole Life Policy

What whole-life policy benefits would make you choose this type of policy over others?

Permanence

Term life policies only provide coverage for 10 to 30 years. After this, you’ll need a new policy, which will mean applying for insurance when your age, health, and risk factors are likely to attract higher premiums.

If you want to buy life insurance as an investment, a permanent option eliminates any risk.

Consistency

Variable-rate life insurance policies increase or decrease in value with market fluctuations, taking your premiums the same way. Might you one day find yourself struggling to pay the monthly premiums if they’ve increased beyond what you anticipate?

Fixed-rate whole-life policies require zero risk because you can budget on premiums that don’t change and that guarantee the value of your death benefit.

Tax Breaks

When you keep money in a traditional retirement account or another investment, you pay taxes on the interest it accrues and any dividends the investment pays out. Tax-deferred whole life insurance is a great investment benefit. You may access its value without reporting taxable gains.

Potential Collateral

If you need a loan for last-minute expenses or to pay off a medical bill, you can leverage your policy’s cash value as collateral. You won’t have to pay the money back, but then the policy will reduce your death benefits by the amount of the remaining loan when you die.

Tips for Leveraging Life Insurance To Earn Money

To optimize your life insurance as an investment, follow these tips:

Take Out a Loan

If you don’t need your full death benefits, you could take out a loan and only repay the amount you need to care for your family after your death. This helps you obtain the benefits of your whole life insurance investment. For example, if you have a $300,000 policy and take out a loan for $100,000, you would still have ample value left if you didn’t repay the loan.

Withdraw the Money

You can also opt to receive monthly payments rather than pay monthly premiums. Doing so has the same effect on your death benefits as taking out a loan. Use this option if you don’t need a large lump sum.

Accelerate Your Benefits

Some policies allow you to receive your death benefits while you’re still alive, almost like catastrophic illness insurance that helps you pay hefty medical expenses. If you experience a heart attack, develop cancer, or need an organ transplant, you can accelerate a certain portion of your benefits. If your policy allows this practice, you can likely withdraw anywhere from 25% to 100% of the benefits but pay higher premiums for accelerated benefits.

Establish Generational Wealth

Have you amassed a sizeable estate? Did you know that federal estate taxes could reduce its value by up to 40%? You can utilize the power of life insurance as an investment by creating an irrevocable life insurance trust for the following benefits:

• Assets you leave in an ILIT don’t count toward the total value of your estate.
• You can leave your family with ample family security without losing a sizeable portion to the government.
• You can streamline your family’s future financial planning with life insurance.

Collect Dividends

What are dividends? In life insurance, these are much like the quarterly or annual payments you receive from your stocks. If your policy allows dividends, you can use them as follows:

• Pay your monthly premiums (or a portion of them).
• Deposit the money directly into your checking account
• Add the payment to the overall value of your account to earn interest
• Pay back the loan you obtained with your policy as collateral
• Increase the value of your death benefit

Surrender the Policy

What does it mean if you surrender your policy? It means you’re canceling your coverage. You should only use this option if you no longer need your death benefits, as this option may incur tax penalties depending on the overall value of your account.

Who Benefits From a Life Insurance Investment?

While life insurance as an investment may not be the best option for everyone, strongly consider it if any of the following scenarios apply to you:

• You have a life-long dependant, such as vulnerable parents or a disabled child.
• Your family will require help paying estate taxes.
• You need additional portfolio diversification.
• You’ve maxed out your contributions to your retirement accounts.
• You can afford slightly higher monthly payments.

Choose the Right Whole Life Insurance Today

Can you have multiple life insurance policies when making an investment through life insurance? Whether you’d like answers like this or you’d like to calculate whether life insurance as an investment is something you want to leverage, contact Union Risk Services for honest advice from the experts. For a free consultation, call 718-370-3131 today!