Old Bay Insurance Agency Blog
If you have permanent life insurance, you can have greater flexibility in using it for personal and business objectives. Permanent policies will not only provide your beneficiary with death benefits but will also give you cash value accumulation. Here are five of the best ways that you can use the cash value of your life insurance policy.
Personal or Small Business Loans
If you're one of those people who need a personal or small business loan, then your bank will undoubtedly require you some collateral. In that case, you can use your life insurance policy as the required collateral. Get insurance policies that are either renewable after one year or those with five-year term conditions.
Immediate Cash Flow
It usually takes around 15 years before you can get the cash value accumulation part of your life insurance policy. However, you may always borrow against it. You can ask your insurer about it beforehand. You can opt to pay the loan back, or you can have the insurer deduct it from your death benefits. However, watch out for some tax cuts.
Chronic Illness Coverage
Not all permanent policies can allow you access to funds if you encounter chronic illness. In that case, you are literally borrowing against the death benefits in order to settle your medical expenses. However, the conditions of your chronic illness must sufficiently prevent you from going to work before you can get your insurance claims. Always check with your insurer beforehand.
Reduce Estate Taxes
You can use your permanent life insurance policy to reduce estate taxes. In that case, you should ask the insurer to deduct the number of premiums from your estate. Also, you can use your life insurance policy to cover estate taxes. Your bereaved family can use the tax-free cash to pay for your state and federal estate taxes.
Use your permanent life insurance as a tax shelter for your chosen retirement income. In that case, you can take advantage of the non-taxable cash value accumulation part of your life insurance policy. This is useful since most high-income earners should max out as they contribute to their 401(k) plans.
Some Final Words
Your life insurance policy has many other uses like you can use it as coverage for business loss. What’s more important is that you should buy a policy when you’re still young. Then, when you’re older, you can use it depending on your needs.
At Old Bay Insurance Agency, Inc, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (410) 777-5390. Get your free quote today by CLICKING HERE.