Six Smart Ways Your Life Insurance Policy Can Earn You Money

You spend money on your life insurance premiums, but probably don’t realize how your policy could be earning you some money. The trick is to know how to approach a life insurance policy so that you don’t waste cash unnecessarily. If you have a life insurance policy or are wanting to get one (which is especially important if you have a family to support), here are ways it can earn you some money on the side.

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You Can Use it as an Investment

If you have a permanent life investment policy, you can use it to save money. This happens because you don’t have to pay any taxes on your capital gains, interest or dividends until your time of withdrawal.  How do you decrease your tax bill by having permanent life insurance? By transferring your policy’s death benefit (or money that your policy pays to the beneficiary after death), which is completely tax-free.

You can Borrow Against the Cash Value

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You might have heard that you can borrow against the cash value of your permanent life insurance policy, but what does this really mean? If you place money into a retirement plan that has a tax advantage and then you want to remove it earlier than when you retire, you’ll probably notch up penalties. However, with a permanent life insurance policy, things are a little sunnier because you can use it in emergencies by borrowing against the funds that have accumulated. Best of all, the money goes into your account tax-free. You’re basically borrowing money from the insurance policy so that you can use the cash value of your policy as security.

It’s a good way of gaining money fast for a rainy day if your other money is tied up elsewhere. Then, when that secondary source of money becomes available, you can use it to repay the loan. And do remember to repay the loan otherwise this will translate into a lower amount on your policy should the beneficiaries need to claim it.

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You Can Save Money by Paying Upfront

Paying your life insurance premiums annually instead of monthly can help you save money because it will provide you with discounts. It makes sense because you’re paying the full year’s amount in one go. Although this might be difficult to pay the amount in full, keep your eye on the bigger picture and the bonus is that you’ll have one less bill to worry about throughout the year!

Don’t (Necessarily) Buy it if You’re Single

Although you might already be fielding suggestions from salesmen about how important life insurance is, it can be a good idea to delay it if you don’t have kids to support. However, the catch is that if you do consider life insurance later on in life, you will be dealing with larger premiums because life insurance rates go up the older you get.

Even if you don’t have kids, however, you might still be able to benefit from life insurance. An example is if you own a small business and want to ensure it will continue running should something happen to you. Likewise, another situation in which life insurance can be beneficial when you’re single is if you have parents who rely on you. In such cases, a life insurance policy would ensure that whatever money comes from you now will still be there for the people depending on it should you prematurely die.

Kill Your Bad Lifestyle Habits

If you smoke, then you’re lumping extra insurance costs that you don’t need to be paying. This is because smoking is linked to a variety of illnesses and so it poses a greater risk to insure you. The good news is that even if you already have a life insurance policy, just by kicking the nasty habit you can reap the rewards. Make sure you have been off cigarettes for a year before reviewing your policy. This could cut costs of your premiums.

The same goes for alcohol use, by the way. If you drink a few glasses of alcohol a day, this can shoot your premiums up by up to 50 percent or more! Get rid of these bad lifestyle habits and see how it pays to be healthy.

Get a Non-Standard Term

You might think you need to choose a set category of years for which you are covering yourself, such as 20 or 25 years, but you can actually adjust the amount to fit your specific situation. As an example, say that it’s going to take you 23 years to finish paying your mortgage. You can choose a life insurance policy that will give you coverage for this time so that you can still make payments if you die prematurely. Then, after this important period of time, the cover will end, meaning you don’t have to commit yourself to a life insurance policy for life. The key is to choose a term life insurance policy that will offer you a policy tailored to what you really need while saving you money.  That way you can utilize any benefits that you may not be aware of.

Having a life insurance policy doesn’t have to give you an extra expense with no benefit! By understanding some simple yet beneficial ways in which you can save, you’ll be able to make the most of your policy while stashing aside a bit extra cash.