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Wills and estate planning

3 ways to utilize your life insurance policy for terminal illness

If you or someone you love is facing a terminal illness or serious disability, the following are three things you may be able to do with your life insurance policy.
There are many good reasons for having life insurance. Not only can it help protect the people you love from suffering financial hardship after you're gone, but it may also provide you with options that allow you to use a portion of your policy's death benefit should you become terminally ill. Moreover, you may still have the option to buy larger amounts of insurance as your need for coverage increases.

1. Access your benefits with an accelerated death benefit rider

If your policy includes an accelerated death benefit rider, this feature can allow you to receive a portion of your policy's benefits in advance of your death. This can be helpful if you need money to cover medical expenses, other short or long-term care needs. To claim benefits early, the rider must be included in your policy and you must qualify for coverage according to your individual life insurance contract.

2. Take out a policy loan

If your policy doesn't have an accelerated benefit rider and you want to access the cash value in your permanent life insurance policy, contact your agent or company representative to see if you can take a loan against your policy. While a policy loan can be an option for getting the cash you need while you are still alive, borrowing against your policy will reduce your death benefit if left unpaid, leaving your loved ones with less cash than you may have wanted. Like any other loan, a policy loan will also accrue interest.

3. Buy additional coverage with your guaranteed insurability rider

If at the time of your life insurance application you opted to buy a guaranteed insurability rider, you may be able to buy additional coverage to protect your loved ones - despite being diagnosed with a terminal illness. Also known as a guaranteed purchase option or future increase option rider, the guaranteed insurability rider essentially allows you to buy more life insurance without having to undergo the underwriting process in order to qualify for more coverage. Keep in mind that most policies generally only allow you to exercise this option at certain intervals - such as at your policy anniversary date or every five or 10 years. Check with your agent or company representative to learn more about your options.



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