How Do You Use Life Insurance While You're Alive in Terry, MS?

Which policies build cash value you can use?

Only permanent coverage builds cash value. Whole life grows at a rate the insurer sets in the contract. Universal life credits interest and lets you adjust premiums within limits. Variable life places the cash value in investment subaccounts you choose, so it can rise with the markets and it can also fall.

Term life is different. It protects your family for a set number of years and is usually the lowest-cost way to do that, but it does not build a balance you can draw from. If living access matters to you, that is a reason to compare term life with a permanent policy before you buy, not after.

How do policy loans and withdrawals work?

Once cash value has built up, the insurer will usually let you reach it in a few ways. Each one has its own cost, and the details sit in your policy contract, not in a general rule.

A loan does not have to be repaid on a schedule, but interest accrues, and an unpaid balance comes out of the benefit your beneficiary receives. If loans grow larger than the cash value, the policy can lapse, which may also create a tax bill. Because tax treatment depends on your policy and your situation, we suggest checking any large withdrawal with a tax professional first.

• Policy loan: borrow against the cash value, with the policy as collateral.
• Partial withdrawal: take out part of the value, which lowers the benefit for good.
• Premium offset: let the cash value pay some or all of your premiums.
• Surrender: end the policy and take the remaining value, minus any surrender charges.

What does this mean for variable life insurance?

Variable life gives you the most say over how the cash value is invested, which is also why it needs the most attention. If the subaccounts drop, there is less to borrow against, and a loan taken during a weak market can strain the policy faster than you expect.

Before you buy, read the prospectus with us and look at the fees, the investment choices and what happens to the policy if returns are low for several years. Once you own it, your annual statement shows the cash value, any loan balance and the current benefit. Those three numbers tell you whether using the policy now is comfortable or risky.

What are living benefit riders?

A rider is an added provision to your policy. Many insurers offer accelerated benefit riders that can pay a portion of the benefit early if you are diagnosed with a terminal, chronic or critical illness. The qualifying conditions, the amount you can reach and any fees vary by insurer and by policy, including some term policies.

These riders are often easiest to add when the policy is first written. Money paid early is subtracted from what your beneficiaries later receive, and in some cases it can affect eligibility for certain assistance programs. We go over these points in plain words so you know what the rider does before you decide to include it.

What should you check before you tap a policy?

Start with your most recent statement and a call to the insurer to confirm the current cash value, loan balance and any surrender charges. Then think about who depends on the benefit. A loan that seems small today can matter a great deal to a spouse or child later.

For the families we work with around Terry, we keep this simple. Each client receives a one-page summary of your coverage: what you own, what it costs, what it protects. Every client gets a yearly review, and we schedule it, and your beneficiaries are checked every year. If the day comes when your family needs to file, they never have to file a claim alone; we walk your family through the claim personally.

• Current cash value and any outstanding loan
• Interest rate on policy loans
• Surrender charges and how long they last
• Riders on the policy and how they pay
• Who is named as beneficiary today