We all look at life insurance as a pretty much straightforward financial product. Policyholders send premiums to the insurance companies who then pay out death benefits to the policies’ beneficiaries. However, there are a lot more options than people realize and these plans can be more complex than we know.
For instance, some policy benefits may only fit a special group of people in the society. These people may be grouped according to careers, age, or any other special classification. However, virtually anyone can enjoy the many perks of life insurance.
You may not be aware of them, but here are 6 life insurance perks that could have you raising your eyebrows:
1. Cover your child’s college fees
Through your life insurance, you can take out loans against a whole life policy to cover college tuition costs. These loan rates are in fact far much better than other conventional student loans. Therefore, the interest payable is channeled back to the policy rather than a commercial bank or even the government.
Instead of piling up student loans at the exorbitant market rates, you can simply use your life insurance policy to finance your child through college. The added advantage is that you continue to strengthen your life insurance policy in the process.
2. A source of money if you become disabled
Many life insurance plans offer disability, chronic illness and critical illness payouts for their policyholders. You need not be on your deathbed or already dead so as to trigger the benefits. Some insurers offer early death benefits to their policyholders if they become disabled or have a critical illness.
These options provide a cushion for policyholders who may suddenly find themselves unable to work and earn some cash as the medicals bills pile up.
3. Provide benefits if you are terminally ill
This is a standard perk for many life insurance (whole life) policies. It provides ‘living benefits’ to policyholders that have a life expectancy of 12 months or less. They receive a portion of their death benefits in advance. Many reports indicate that living benefits are under-utilized as much as they are quite common within most life insurance plans.
4. Pay for long-term care expenses
There are specialty products that combine both life and long-term care benefits. Since long-term care insurance is usually expensive, you can add a rider to a life insurance policy so as to get this particular coverage. This, of course, reduces the total amount of the death benefit.
However, while there are extra costs for adding long-term care coverage onto a life insurance policy, it is more cost effective in the long run than having two plans. In fact, this would be a great choice for people who want to have long-term care insurance but are not quite sure if they’ll need it.
5. Insure the life of your child
Parents can also add a rider (a child) to their own life insurance plan. While they may be able to buy an insurance policy specifically for their child, they can also include them in their own plan. Many insurers offer child ‘riders’ at a lower cost and with more flexible coverage levels.
6. Return your money if you do not die
This might seem surprising but, your life insurance company can return all your premiums if you get to the end of your policy without making a single claim. You can get all your money back if you manage to outlive your life insurance cover.
Many plans come with valuable extras. Don’t just focus on the death benefits. Compare the offers and benefits rather than just go looking for a particular price point.
What other benefits does your life insurance plan have? Share with us in the comments section.