The main purpose of life insurance is to provide financial security for your loved ones in any unexpected event. But what if we tell you that there is a lot more than just financial security? Financial security is the core, but there are different advantages to having a policy. Here is a list of 7 lesser-known benefits of a life insurance policy beyond the basics.

7 Lesser-Known Benefits of Life Insurance Policies

Living benefits

Life insurance is not just about providing your loved ones with financial security after something unexpected happens to you. Many policies offer living benefits. These benefits allow policyholders to access funds during lifetime cases of illness or chronic conditions. This feature of a life insurance policy provides a safety net for unexpected medical emergencies and can offer peace of mind knowing that financial support is available when it's needed the most.

Cash value growth

Certain life insurance policies, like whole life insurance or universal life insurance, accumulate cash value over time. The main benefit of this cash value is that it is tax-deferred; it means that you don’t need to pay taxes on the gained value until you withdraw it. This feature of a life insurance policy can help you out as an additional supplement for various funds like education expenses, home improvements, or retirement income.

Estate planning tool

Life insurance policies play an important role in estate planning by providing liquidity to cover estate taxes, debts, and other miscellaneous expenses without the need to sell assets. This ensures that your loved ones receive a sufficient amount in unexpected events without any tax burden.

Business continuity

For business people, life insurance policies serve as a financial asset in any unexpected event that ensures operation continuity. It helps in covering expenses, paying off debts, or buying out a deceased partner’s share, allowing the business to carry on smoothly during the transition period.

Supplement retirement income

Many life insurance policies offer options for receiving retirement income through policy loans or withdrawals against the cash value. This feature is beneficial for individuals who have made all the contributions to other retirement accounts or are looking for more sources of income during retirement.

Protecting insurability

Purchasing a life insurance policy at a very young age attracts lower premiums and higher benefits during the policy period. Moreover, many policies offer the option to convert term insurance into whole life insurance without a medical exam, providing continuous coverage regardless of a change in health status.

Legacy planning or charitable giving

Life insurance can be used as a tool for legacy planning, allowing individuals to create a trust by naming a beneficiary and it is tax exempted. You can name the beneficiary in the name of a family member, charity or any organisation. It’s a meaningful way to support causes that are close to your heart and leave a positive message for society and for future generations.

Conclusion            

In conclusion, life insurance transcends its traditional role of financial protection by offering a multitude of lesser-known benefits that cater to various needs and circumstances. From providing living benefits and cash value growth to serving as a vital component of estate planning and business continuity, the versatility of life insurance makes it an indispensable asset in securing one's financial future and leaving a lasting legacy. So, next time you think about life insurance, remember to explore beyond the basics and uncover its hidden gems.