What Can Life Insurance Do (besides provide a death benefit)?

Life Insurance is a unique financial product. It was designed to provide a death benefit for your beneficiaries if you die, but permanent life insurance can be used for a multitude of other financial needs as well.

With permanent life insurance, you can protect against death, yet plan for life. The primary purpose of life insurance is to provide income-tax-free death benefits, but life insurance can be used for other purposes as well.

In addition to valuable death benefits, permanent life insurance contains a cash value element that grows tax-deferred (with no immediate taxes) inside the policy. This cash value can then be accessed through income-tax-free loans and withdrawals that can be used to meet a variety of purposes*.

Plus, because you don't have to pay current taxes on your cash accumulation, your principal is not reduced; as a result, your money grows faster.

With life insurance you can meet a variety of other financial needs. You can...

fund a college education supplement retirement income provide cash in emergencies Emergency Fund Calculator - reward key employees or continue a business Find out... The various types of life insurance Which type of insurance is right for you How much insurance you need Why it's critical to buy life insurance now

For more information about the various types and terms of life insurance, see LIFE-line.org - ., which is an educational site designed to give you unbiased information about life insurance.

* Proceeds from a life insurance policy paid because of the death of the insured are generally excludable from the beneficiary's gross income for income tax purposes.
Income and growth on accumulated cash values is generally taxable only upon withdrawal.
Adverse tax consequences may result if withdrawals exceed premiums paid into the policy.
Policy loans from life insurance policies generally are not subject to income tax, provided the contract is not a Modified Endowment Contract, a contract in which too much premium is paid, resulting in an over-funded policy. A policy loan or withdrawal from a life insurance policy that is considered to be a Modified Endowment Contract may be taxable upon receipt. Also, in the early years of a universal life policy, a percentage of any amount withdrawn may be subject to federal income tax.
A policy loan or withdrawal will reduce the policy's ultimate death benefit and cash value.