Financial pressures can be challenging for families across the U.S., especially as the overall cost of living continues to rise. Many rely on their savings or credit cards to handle big expenses during an unexpected time of need, but one option that’s often overlooked is the cash value built up with permanent life insurance policies.
The benefits of whole life insurance, a type of permanent life insurance offered by Boston Mutual, are twofold. Not only does it protect your loved ones’ financial future in the event of your passing, but it also builds cash value over time, which you can access during your lifetime.
In the event of an emergency, policyholders with insurance policies in good standing can access funds by borrowing against their policy’s value—helping to manage unexpected expenses like tuition or medical costs, while continuing to safeguard their long-term financial future.
Here are some more tips for maximizing the benefits of existing life insurance coverage.
Helping You Cover Short-Term Expenses
Life is unpredictable, and things can happen suddenly. Whether you’re facing an unexpected job loss or an emergency home repair, accessing funds quickly can be critical.
As your whole life insurance policy accumulates cash value, you can borrow against it as long as you are making regular payments. These loans can be used for a range of needs.
Imagine your water heater breaks unexpectedly. Instead of putting the cost on a high-interest credit card, you could borrow from your life insurance policy’s cash value to cover the repair.
You can get money from your policy in two ways:
- By taking out cash, which may be taxed.
- By borrowing money from it, which you don’t have to pay taxes on, as long as you repay it over time.*
This gives you flexibility whether you need money for a big purchase or an unexpected expense.
Whole life insurance can also supplement your existing retirement accounts, such as a 401(k) or IRA account, helping you feel more confident and secure as you plan for the future.
* Loan repayments do include interest payments.
Helping Your Loved Ones Cover Long-Term Expenses
While whole life insurance offers short-term flexibility, its primary purpose is to provide long-term financial security for your loved ones.
It protects against financial loss caused by the insured’s death, typically through a lump sum payment paid directly to a beneficiary. This money can help cover final expenses, replace lost income, and pay off any outstanding debts.