You have an option to take out money from these policies to use for ANYTHING.
Let me explain.
Permanent life policies do not have term limits like “Term Life” policies.
You start paying your premiums, those funds get invested by your life insurance company and if during the policy you suddenly have a need for extra income… you can borrow from the policy at anytime- tax free!
IRAs/Roths, mutual funds, they don’t offer you this “TAX FREE” option but a permanent/Whole life policy DOES!.
There are NO restrictions on the use of this money, you can use it to;
- Cover medical costs
- Pay off debt
- Travel, maybe you have a terminal cancer and want to travel while you can
- Use the money to invest in another venture
- Pay for education or college
- Finance major purchases
the list goes on, anything you need.
This is possible because the policy continues. The money you take out does go against the policies max payout, but even withdrawing money early-still offers the death benefit option after you die.
Here is an example of how this often works;
Jon is a 61 year old attorney. He was just diagnosed with stage 3 lung cancer and has medical bills to cover but also wants to take a trip to Europe with his children and grandchildren before he starts chemo.
He borrows from his permanent life insurance policy that he bought at age 44 y/o. He borrows 32K (tax-free) and is able to cover those things he wants.
At his death, his 5 million dollar death benefit is paid to his wife as his beneficiary minus the 32K he borrowed from.