If I knew then what I know now.
If I knew then what I know now, I would have gotten life insurance when I was much younger.
Sure, it would have been an expense, and I really didn’t want to think about mortality when I was in my twenties or thirties. Who does? But I hoped I would eventually get married and have children, which happened for me in my 40s, and looking back, I wish I hadn’t put it off.
Why? For starters, either Term Life or Permanent Life would have been much, much cheaper. Term is great for cheap death benefit protection, while the cash value, indexing, and loan features apply exclusively to permanent policies (like IUL or Whole Life).
But there’s another reason. I didn’t understand what some types of life insurance could actually do while I was still alive.
Modern permanent life insurance policies can be designed to accumulate cash value over time. If properly structured and funded, that cash value has the potential to grow tax-deferred and become a resource you can access during your lifetime.
And here’s the kicker, you don’t necessarily have to wait until you’re deceased for your life insurance to benefit you.
Many newer policies offer something called living benefits, which are exactly what they sound like. Depending on the policy and circumstances, living-benefit riders may allow you to access a portion of your death benefit if you experience a qualifying critical, chronic or terminal illness.
Think about what that could mean.
Instead of a life insurance policy only providing money to your family after you’re gone, a portion of that benefit could be available while you’re still here — when you and your family may desperately need it.
Then there’s the cash value.
If you properly fund a permanent life insurance policy over time, compounding can become your best friend. As that cash value grows, you may eventually be able to borrow against it for other financial needs, including paying off debt, buying a car, helping with a down payment, or even supplementing retirement income.
Here’s another kicker. Yes, another one!
When you take a policy loan, you’re borrowing against the value of your policy rather than withdrawing the cash itself. Meaning, your cash value may continue to receive interest or index credits even while the loan is outstanding.
And technically, you don’t have to repay a policy loan on a fixed schedule like you would a traditional bank loan, assuming the policy stays active and properly funded.
Loans allow you to leverage the power of your cash value.
And that leverage along with the protection is really my overall point.
Life insurance today can be much more than, “I die, somebody gets a check.”
Had I understood all of this when I was 30, when insurance was cheaper and I had decades ahead of me for cash value to potentially grow, I would have looked at life insurance very differently.
I wish someone had explained it to me then.
So, I’m explaining it to you now.
If you're curious what options look like for your age and budget, then we can run a few numbers together to find some clear answers.
By Jeff Kueppers - CA Lic#4544453