How to Use Life Insurance While Alive

Shawn Plummer

CEO, The Annuity Expert

Everyone knows life insurance is meant to provide financial security in the event of an untimely death, but did you know it can also be used while still alive? Understanding how to use life insurance while alive is key to unlocking its full potential – making this a smart strategy when planning your financial security. In this guide, we’ll explore how you can benefit from “using life insurance while alive” and how to make it work for you!

Confused About Life Insurance?

Are you new to life insurance and unsure where to begin? Visit our Learning Lab for expert guidance and insights.

Are You Supposed to Use Life Insurance While You’re Alive?

First, let’s debunk the most common myth: life insurance isn’t solely meant for post-death benefits. Several life insurance policies come with features called ‘living benefits.’ These benefits provide access to your death benefit while you live under certain conditions.

For instance, you may tap into these benefits to cover your medical expenses if you have a chronic, critical, or terminal illness. Or, in some cases, you may use them for any reason you see fit. Yes, it’s your money; you can use it when you need it most.

Use Life Insurance While Alive

How to Use My Life Insurance While I’m Alive?

You can access your life insurance’s living benefits through several methods. Let’s discuss these in detail:

Cash Value Withdrawals

Some types of life insurance, like whole life or universal life, build up a cash value over time, which you can borrow against or withdraw from. You can use this money for whatever you like—home renovations, funding your child’s education, a much-deserved vacation, or even supplementing your Social Security benefits.

Accelerated Death Benefits

Many life insurance policies offer an Accelerated Death Benefit (ADB). This feature allows you to receive a portion of your death benefit early if you’re diagnosed with a terminal illness or require long-term care.

Imagine being diagnosed with a critical illness. Instead of worrying about medical expenses, your Accelerated Death Benefit can cover these costs, leaving you to focus on your health and recovery.

How To Use Life Insurance While Alive

What Type of Life Insurance Can You Borrow While Alive?

Not all life insurance policies offer the same living benefits. You can borrow from permanent life insurance policies like Whole Life and Universal Life. These policies accumulate a cash value over time, separate from your death benefit, that you can borrow against.

For example, suppose you’ve had a whole life insurance policy for 20 years. Over these years, your policy would have built up a substantial cash value. You can borrow against this amount, using it for anything you desire, without any questions.

Can You Use Life Insurance Before You Die?

Absolutely! Specific life insurance policies allow you to access a portion of your death benefit through the policy’s living benefits. This option is typically available if you are diagnosed with a terminal illness, require long-term care, or are under certain other qualifying events.

Consider a hypothetical scenario where you suffer a severe accident, leaving you needing long-term care. With the living benefits in your life insurance, you can access funds to manage your care costs without touching your savings.

Can You Cash Out Life Insurance While You’re Alive?

Yes, you can, but it depends on your life insurance type. Policies with a cash value component, like whole or universal life insurance, allow you to cash out or surrender the policy, thereby receiving the accumulated cash value. Remember, cashing out your policy means forfeiting the death benefit for your beneficiaries.

For instance, if you’re retiring and your kids are financially stable, you might cash out your life insurance policy and use the money to enhance your retirement lifestyle.

Needing affordable help with estate planning needs? We recommend:

Ways To Access A Life Insurance Policy Before Dying.

Next Steps

Life insurance is more than a death benefit; it’s a financial tool you can use strategically to navigate life’s unforeseen challenges. Whether it’s cash value withdrawals, accelerated death benefits, or borrowing against your policy, life insurance can offer more immediate financial solutions than you might have imagined. Remember, the key is to fully understand your policy’s features, align them with your needs, and make them work for your benefit while you live. Life insurance is about ensuring peace of mind for the future and enriching the quality of life today.

Use Life Insurance While Alive

Help With Buying Life Insurance

Contact us if you need help purchasing a life insurance policy. The service is free of charge.

Life Insurance Inquiry

Frequently Asked Questions

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

Scroll to Top