Summerlin Benefits Consulting Q&AAnswer
Oct 15, 2024 - 09:35 AM
Yes, it is possible to access your life insurance benefits while you are still alive in certain situations. Here are some of the common ways:
-
Cash Value Withdrawal: If you have a permanent life insurance policy like whole or universal life, it builds cash value over time. You can withdraw or borrow against this cash value while you’re alive. However, withdrawals may reduce the death benefit, and borrowing can incur interest.
-
Living Benefits Riders: Many life insurance policies offer "living benefits" riders, such as accelerated death benefit riders. These allow you to access a portion of the death benefit if you are diagnosed with a terminal illness or have a chronic condition that requires long-term care.
-
Life Settlements: You may also sell your life insurance policy to a third party for a lump sum payment in what’s called a life settlement. The buyer then becomes the policy's new owner, continues paying the premiums, and collects the death benefit when you pass away. This option can be useful if you no longer need the coverage or need funds for other purposes.
These options vary by policy type and provider, so it’s important to understand the implications, such as tax consequences and reduced benefits, before accessing life insurance while alive. Consulting with a financial advisor can help you explore the best option for your situation.
