Q. What happens to my permanent life insurance if for some reasons I couldn't pay my premium?
A. If you fails to pay premiums for a permanent life insurance, the policy could potentially lapse. We will discuss a way to protect the permanent life insurance below.
Importance of Permanent Life Insurance
There are 3 roles a permanent life insurance, such as Whole Life, plays in one's overall asset portfolio:
a. Family Protection
In the event of your death, the policy proceeds are paid to your beneficiaries income-tax free. This can provide needed income after you are gone.
b. Emergency Fund
As premiums are paid, cash value accumulates. Under current tax guidelines, cash value can be accessed income-tax free via policy loan. You can use it for emergency purposes.
c. Supplement Retirement Income
Just as cash value can be accessed tax-free for emergency purposes, it can also be used to help supplement future retirement income, especially if your policy has collateral loan feature.
In our next post, we will discuss how you can protect these 3 benefits of your permanent life policy, if you have difficulty in paying premium due to some unforeseen reasons.
A. If you fails to pay premiums for a permanent life insurance, the policy could potentially lapse. We will discuss a way to protect the permanent life insurance below.
Importance of Permanent Life Insurance
There are 3 roles a permanent life insurance, such as Whole Life, plays in one's overall asset portfolio:
a. Family Protection
In the event of your death, the policy proceeds are paid to your beneficiaries income-tax free. This can provide needed income after you are gone.
b. Emergency Fund
As premiums are paid, cash value accumulates. Under current tax guidelines, cash value can be accessed income-tax free via policy loan. You can use it for emergency purposes.
c. Supplement Retirement Income
Just as cash value can be accessed tax-free for emergency purposes, it can also be used to help supplement future retirement income, especially if your policy has collateral loan feature.
In our next post, we will discuss how you can protect these 3 benefits of your permanent life policy, if you have difficulty in paying premium due to some unforeseen reasons.
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