How savvy policyholders are maximizing their life insurance policies

From leveraging cash values to taking advantage of life settlements and activating “living benefit” riders, these are all strategies savvy policyholders use to maximize their life insurance policies.

Follow in their footsteps, and you, too, can “liquidate” your policy and enjoy its financial benefits while you’re still alive and well. Understanding these tactics can also help you recognize why life insurance matters, even more so if you don’t have one yet, just like half of U.S. adults, as reported by CNBC.

Can Anyone Get Life Insurance? 

No. Not everyone can purchase and obtain a life insurance policy. Age and health restrictions are among the primary reasons many adults don’t have a policy.

As the Texas Department of Insurance points out, not everyone needs life insurance, either. If no one relies on you financially, for instance, purchasing and maintaining a policy may not be practical.

If, however, you have dependents, life insurance can help provide them with additional financial security in case of your passing. 

When Is the Best Time to Get Life Insurance? 

Being young and healthy is usually the “best” time to secure a life insurance policy, as this allows you to lock in the lowest possible rates and premiums. It becomes even more critical if you take on significant debt (like a mortgage) and you gain dependents (e.g., spouse and children).

With a life insurance policy attached to an adequate death benefit, you can protect your loved ones from financial hardships even after your passing. 

How Are Savvy Policyholders Maximizing Their Life Insurance Policies? 

Policyholders maximize their coverage by opting for life insurance with living benefits, such as universal life insurance or whole life insurance. Both are “permanent” policies that feature a cash value component and remain active as long as the policyholder pays the premiums. 

Leveraging Cash Values 

With a universal or whole life insurance policy, part of your premium payments goes toward a cash value account. You can think of this as a savings or investment vehicle. It grows over time (thanks to interest), as long as you pay your premiums. 

After a pre-agreed-upon period of time, you can “borrow” against the cash value your policy has accrued. You can use the funds for whatever legal purpose you see fit. 

Taking Advantage of Life Settlements 

If you want to sell your life insurance policy for cash, you can do so through the life settlement process. It’s often a better option than surrendering your policy, as you’ll get a lump sum payment that usually exceeds the surrender value several times. 

Activating “Living Benefit” Riders 

Another tactic savvy policyholders use to maximize permanent and term life insurance policies is to activate applicable living benefit riders, “accelerating” the receipt of the death benefit. You can, for instance, advance a portion of the benefit if your doctor diagnoses you with a specific medical condition. 

Get the Most Out of Your Life Insurance

If you’d like to become a savvier life insurance policyholder, consider leveraging its cash value component, taking advantage of life settlements, or activating living benefit riders. With these tactics, you can reap the benefits of having a life policy while you’re still alive. 

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