Life insurance isn’t just for life anymore. Over the last 20 years life insurance has morphed into a instrument for personal financial safety. These policies can ensure everything based on the face amount of the life insurance
Example 1: 35-year-old female buys life insurance for her family pays $50 on a $500 thousand dollar term life policy. Getting out of her car she gets hit by a truck and is taken to emergency at the local hospital. Her condition has pushed her critical illness rider into play. Now she will have 90% of the face value of this policy for whatever she needs to do or pay. This includes, mortgage, home health care, and food. This will allow her to hire her older sister to come and help.
Example 2: a 35-year-old male plans to use his IUL life insurance to save for retirement. This means you have to find the exact sweet spot where you don’t have to pay too much for life insurance and you can over fund this policy to accumulate possible double-digit growth in market. With regularity he put mmore than $12,000 a year in this retirement fund. Although this retirement fund allows for annual high caps 14% and annual reset he has seemed to average 7% compounded. By the time he reaches his 49th birthday he will have saved over $350 thousand cash in this account. If he needed to buy something like a house or car or pay for his children education he could use this cash value to give himself a loan. Of course this loan is costing 4% but he is averaging 7% growth. If this were an annuity he would have had to pay penalties plus taxes on growth. Not so with the life product.
Example 3: Grand parents gift $25,000 to a IUL for their grandchild. By the time the child is 20 years old the cash value without additional premium has grown to $100,000. This cash can used for anything, education, a car, or whatever is needed. If left alone, by the time the child is 50 there will be near a million dollars in cash value will be around $1 million dollars. A 529 educational annuity can only be used for education without penalty but this life insurance cash value can be used for anything.