People tend to consider a lot of different options during bad economic conditions. Some of these options include credit cards, IRA, 401(k) or even stashing cash in their own house. However, according to a survey a very viable option that most people don’t consider is life insurance, which is often overlooked as a resource that could offer immediate funds. It has also been found that a lot of people lack awareness when it comes to identifying the investment features offered by some of the insurance policies.
According to the survey, life insurance is rarely on top of anyone’s mind and more than 2/3rd consumers are not even aware of the fact that there is cash value involved in case of life insurance. This lack of awareness is also why a lot of people don’t consider life insurance as a good investment option. Permanent and term are the two main types of life insurance available. While the term life policy provides benefits if the insured dies during the time frame of the term, the permanent insurance provides benefits by combining an investment component with death benefit coverage. The investment component can in fact build cash value over a period of time.
There are provisions offered by some insurance providers allowing policy holders to get back cash almost immediately. In fact, part of the premium paid for a permanent life insurance adds to the cash value that increases over a period of time. This can even provide tax benefits if you can manage it smartly. Moreover, it is possible to take a loan against the policy value of permanent life insurance as long as the premiums have been paid for a stipulated time frame. The loan rate too could be lesser as opposed to the loan borrowed against 401(k). There are tax benefits because IRS doesn’t consider cash from these as income.
Quick funds can also be available through a permanent life insurance as you can withdraw the entire accumulated funds at the time of an emergency. However, one must also be careful considering the fact that the premiums for life insurance increase with age. Those who don’t have any dependents or have term life policies providing coverage can make the most of these options. Lastly, permanent life insurance is a good way of setting money aside without worrying about the volatility in the stock markets at any stage.
