Life Insurance: Why it’s one of your most valuable assets

Two elderly women smiling and embracing

When you think about life insurance, your mind likely goes to keeping your family secure in the event something should happen to you. But this asset class can be worth a whole lot more.
 

Article highlights
   

  • Cash-value growth
  • Health expenses assistance
  • Business ownership protection

When utilized wisely, a life insurance policy can be one of the more significant assets available to you, to your loved ones and even to your business.
  

And, while people typically assume that they need to wait—or have their family wait—to capitalize on their policy, some life insurance benefits are actually accessible during the life of the insured.


Ability to access your cash value

Many life insurance policies offer potential cash-value growth that may be tax-deferred and can benefit from asset protection. With such a policy, the cash value is intended to be accessed tax-free, without impacting your tax bracket or creating tax exposure. It can be used for any financial needs that may arise for you or your family, such as a child’s college tuition or supplemental income in retirement. *

Based on the type of life insurance policy you choose, you may also have a couple of options for taking out a loan on your policy. For example, with indexed universal life insurance,1 participating loans are structured so all of the money you borrow from your policy’s indexed account value continues to work for you. That means all of your policy value—borrowed and unborrowed—continues to have indexed growth potential, as if it were never taken out. Your earned interest crediting rate may offset or exceed the annual interest rate charged, but the crediting rate is not guaranteed.

Flexibility for late-in-life expenses

If you’ve witnessed a loved one experiencing a health issue late in life, you may already be familiar with the emotional toll it can take on a family—not to mention on a family’s finances. Longevity is on the rise and, without adequate protection, health-related expenses can result in drawing down retirement savings at rates two to three times faster than planned. Half of all individuals turning 65 today will need the coverage of an additional care plan during their lifetime.2

A rider on your life insurance policy can help safeguard your retirement savings if you encounter unexpected medical expenses. Added benefits can help make it possible for you to live comfortably at home with the care you need, without financially compromising your beneficiaries. Additionally, you’ll have access to the cash value for other health-related expenses and won’t risk losing your policy. Note, some riders are included in a policy while others are available for an additional cost and are subject to availability and restrictions.

Additional business protection

If you’re a business owner, life insurance can play a role in preserving what you’ve worked so hard to achieve. It can help provide the capital needed to avoid selling a business if a partner retires, or to keep things going after the loss of a key employee. And, with proper planning, it can assist your loved ones in retaining control of your investment after your death by helping them to purchase your stock and receive proper compensation or equity. Life insurance policies can also provide tax advantages in a variety of business contexts, such as employee benefits or owner disability. Every business is uniquely complex, and your financial advisor can help leverage life insurance to help protect yours.

Explore what Lincoln has to offer,3 or talk to your financial advisor about how your life insurance policy can be an asset now, rather than just a death benefit down the line.

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1“Universal Life Insurance” LincolnFinancial.com. 2017. https://www.lfg.com/public/individual/exploreinsuranceannuities/lifeinsurance/universallife

2“Life Insurance Playbook.” LincolnFinancial.com. https://www.lfg.com/static/wcs/digitalbrochure/intbr02/index.html

3“What Type is Right for Me?” LincolnFinancial.com. https://www.lfg.com/public/individual/exploreinsuranceannuities/lifeinsurance/whattypeisrightforme

*Distributions are taken through loans and withdrawals which reduce a policy’s cash surrender value and death benefit and may cause the policy to lapse.  Loans are not considered income and are tax free. Withdrawals and surrenders are tax-free up to the cost basis, provided the policy is not a modified endowment contract (MEC). A MEC policy is one in which the life insurance limits exceed certain high levels of premium, or the cumulative premium payments exceed certain amounts specified under the Internal Revenue Code.