Life Insurance is Your Property

The primary reason to own life insurance is the death benefit – the money your beneficiaries will receive when you move on. But don't overlook the advantages that life insurance can provide for you now while you're living. Let's take a look at some of these "living benefits."

One of the most prevalent living benefits of whole life insurance is the cash value that it accumulates. Throughout the years of paying premiums, a portion of your payments accumulates as cash value. This cash accumulation can be withdrawn to meet emergencies, used as collateral for policy loans, or taken later as retirement income. Many policies also pay dividends when the insurance company makes a profit.

There are other benefits that come with owning a piece of property. Yes, property. Just because your life insurance doesn't look like property (after all, it's simply written on a few pieces of paper), don't sell it short. In fact, many of the characteristics and advantages of property apply to life insurance.

For example, whole life's cash value can be used as collateral for borrowing money from sources other than the policy as well. Let's say you decide that you need to borrow money from a bank. Depending on the amount and type of loan you're seeking, the bank may want to determine the type and amount of property that you can call on to pay back the loan should your income become interrupted. Your life insurance can act as the collateral you need.

Another advantage of life insurance as property is that it creates an immediate estate. To understand this concept, here's an example: suppose a man invests in a parcel of land. He may have to wait many years for that land to appreciate. What's more, its value may never quite reach what he anticipated for it; it may even go down. And if that man were to die the day after buying the land, whether he paid all cash for it or not, his family might have difficulty liquidating the property and getting the money out of it. But with life insurance, at the moment the policy goes into effect the insured policyowner has established a fund that will be paid to his beneficiaries – even if only one premium payment has been made. He doesn't have to wait for the property to appreciate in value nor be concerned with whether the value will rise or fall.

But that's not all. A further advantage is the convenience and leverage of paying for life insurance in installments. In order to have the full face value of a life insurance policy in force, the entire premium to purchase the policy doesn't have to be paid up front. It can instead be paid in installments. The total proceeds of that policy are guaranteed to be paid to the beneficiary at the death of the insured as long as the premiums are met and there are no outstanding loans against the policy. And as for return on investment, life insurance offers plans that can be very advantageous, especially with regard to the taxation of accumulated cash values.

Life insurance is indeed a property that you can own, an asset. Don't overlook it; remember to regard it as such.