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7 Surprising Benefits Of Permanent Life Insurance

by

Joe Maas

No one likes to think about their demise, so life insurance can be an unpleasant topic sometimes. But when you know the flexibility and benefits of life insurance, it has some really exciting applications. Here are seven benefits of permanent life insurance that might surprise you.

1. Life insurance is a non-reportable asset when applying for federal aid through a federal program such as FAFSA (Free Application for Federal Student Aid), so funds in your life insurance policies may not restrict your children\’s potential for acquiring government-funded college loans. You can use the accumulated cash value in your policy to help fund your children\’s college education without jeopardizing your life insurance coverage too! Everybody wins.

2. Life insurance proceeds usually go to your beneficiaries income tax free.

3. Assets in your life insurance policy, such as accumulated cash value and retained dividends, can be withdrawn and used income tax free through loans and surrender of basis. You can use this cash value for a down payment on a home, to fund retirement, pay for additional education, etc. In other words, you can make your money work for you.

4. If you choose, you can withdraw sometimes as much as 90% of your policy\’s resources and still keep the policy\’s integrity.

5. If you borrow from your policy, you will be charged an interest rate, but you are also credited with a rate. If the loan rate is 8%, and the credit rate is 7%, your loan cost is only 1%. (This is a general example only; always consult your insurance advisor.)

6. Being allowed to borrow from your policy is an advantage. If you had to cancel your policy to acquire its funds, the money may be subject to income tax at your tax bracket\’s rate. It could be better being charged a 1% rate, per the example, than a 30% tax bracket rate for a forfeited policy.

7. Life insurance is a good tool for making a deferred compensation arrangement with your executives or key man. For example, if you want to secure the services of one of your executives, you can have the company purchase a permanent life insurance policy, that accumulates cash value, to defer compensation for 10 years. If the executive remains the 10 years, the proceeds from the policy act as a form of a retirement plan; if the executive should die beforehand, the proceeds can go to the family.

There are dozens of other ways to use life insurance to your advantage. To learn more, contact your insurance agent, investment advisor or financial planner to find out how life insurance can help you reach your financial goals.

Copyright (c) 2014 Joe Maas

Life insurance is an important part of an individual\’s long-term financial plan. To learn more about how it fits into your portfolio, contact the financial planning and investment experts at Synergetic Finance in Seattle. Learn more at Synergetic Finance\’s

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