Top 5 benefits of life insurance

A life insurance policy may meet more of your financial needs than you think.

While we tend to think about life insurance as an income source for our family when we die, there are other uses that may benefit your larger financial plan. “One of the biggest misconceptions is the idea that life insurance is only about the death benefit,” says William J. Scofield, Wealth Planning Program Administrator at Regions Bank. “Many people see life insurance only as an expense because of the premium payment, but it can also be an asset.”

Here are some ways life insurance may meet your financial needs.

Long-term care

A 65-year-old has a nearly 70% chance of needing long-term care services at some point in their lives. Many insurance policies offer riders that allow the living policyholder to tap into their death benefit to pay for those expenses, Scofield says.

Big expenses

You may be able to borrow against a policy’s cash value. “You can use this to pay for a big or unexpected expense, like a car or a wedding or a health issue,” Scofield says. If you die before paying the loan back, the value will be deducted from the death benefit.

Retirement income

Some policies build up cash value that can be used for supplemental income in retirement. While drawing from the policy often decreases the death benefit, that may be fine since you may need a smaller benefit once children are grown and your life changes.

Tax-free income to heirs

Take advantage of the tax efficiency of life insurance policies. “When a beneficiary receives a death benefit, it’s not taxable income,” says Scofield. In that way, the money you invest into your policy’s premiums may benefit your overall estate plan.

A succession strategy

Business owners can use a policy to protect their interests in the company. Scofield says, “Each owner can have a policy on the other owner, and if one dies, the policy proceeds can be used to buy out that ownership interest.”

Talk to your Regions Wealth Advisor about:

  1. Who else in your family might need a policy—and why.
  2. Help matching policies to your needs.

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This information is general education or marketing in nature and is not intended to be accounting, legal, tax, investment or financial advice. Although Regions believes this information to be accurate as of the date written, it cannot ensure that it will remain up to date. Statements of individuals are their own—not Regions’. Consult an appropriate professional concerning your specific situation and for current tax rules. This information should not be construed as a recommendation or suggestion as to the advisability of acquiring, holding or disposing of a particular investment, nor should it be construed as a suggestion or indication that the particular investment or investment course of action described herein is appropriate for any specific investor. In providing this communication, Regions is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity.