Let’s be honest—most of us think of life insurance as something that only benefits our family after we’re gone. But what if your policy could actually help you while you’re still here?
It turns out, if you have a permanent life insurance policy (not just term), there are several ways to tap into it when you need a financial boost.
Whether you’re facing unexpected bills, tight cash flow, or just want to stretch your retirement income, your policy might be more flexible than you think.
Here are 5 smart ways to use your life insurance while you’re alive—and what to consider before you do.
1. Take Out a Loan From Your Policy
If your policy has built up cash value, you can borrow against it. It’s like taking a loan from yourself, often at a lower interest rate than banks offer—and usually without taxes due. The catch? If you don’t pay it back, your death benefit shrinks by the amount you owe, plus interest.
Still, it can be a smart option if you need temporary cash and want to avoid dipping into retirement savings.
2. Use Your Cash Value to Cover Premiums
Struggling to keep up with your payments? You may be able to use your accumulated cash value to pay your premiums. This can be a huge relief if you’re on a fixed income or in a tight spot.
Just keep an eye on your balance—if it runs dry and you’re not paying manually, your policy could lapse.
3. Tap Into a Living Benefit Rider
Some policies include a “living benefit” rider that allows you to access part of your death benefit early if you’re diagnosed with a terminal illness. It’s not something anyone wants to think about—but having this option could mean better medical care, less financial stress, and more comfort when it matters most.
Just know: this reduces what your beneficiaries receive later, so weigh the trade-offs carefully.
4. Supplement Your Retirement Income
If you’re retired and have a healthy cash value built up, you might be able to use it as a tax-free income stream. Many retirees borrow from their policies instead of pulling from investment accounts during down markets.
It’s a smart move—just be careful not to overdo it. If you borrow too much and the policy collapses, you could owe taxes or lose coverage altogether.
5. Sell Your Policy (As a Last Resort)
If you no longer need coverage or can’t afford the premiums, you might be able to sell your policy through a life settlement. You’ll get a lump sum now, and the buyer gets the death benefit when you pass.
This should be a last resort—it comes with broker fees, tax implications, and your heirs lose the benefit. But if you’re in financial distress, it’s an option worth knowing.
Bottom Line
Life insurance isn’t just for the people you leave behind—it can actually help you while you’re still here. From emergency funds to retirement supplements, your policy can be a flexible tool if used wisely.
The key is knowing your options, understanding the risks, and speaking with a trusted advisor before making any major moves. Financial freedom isn’t always about having more—it’s about making better use of what you already have.
This article was written by Loretta James. AI tools were used lightly for grammar and formatting, but the ideas, words, and edits are all mine.
