There are two major types of life insurance:

  • Term life insurance provides beneficiaries with a death benefit if the insured dies during the timeframe specified in the policy, usually between one and 30 years.

  • Whole life insurance, on the other hand, provides a death benefit regardless of when the insured dies. Whole life insurance policies also differ from term life insurance in that they combine your life insurance coverage with investments. Each time you pay your premium, part of the cost goes towards investments that build the cash value of your policy.


If you have whole life insurance, you may be able use the cash value of your policy to your advantage prior to the insured’s death. Make sure you look into these five additional financial benefits that may be included in your whole life insurance policy.

1). Withdraw the cash early. If your whole life insurance policy has accrued cash value, you can withdraw a portion of those funds prior to the insured’s death, often without tax penalties. You can use your policy’s cash value for any purpose, such as paying for a loved one’s wedding or college tuition. The only caveat is that the cash you take out from your policy will reduce the value of the death benefit that your beneficiary receives when the insured dies.

2). Take out a loan. You can also borrow from the cash value that your policy has accrued. These loans tend to have lower interest rates and typically give you the flexibility to repay according to your own timeframe. Failing to repay the loan, however, also reduces the value of the death benefit your beneficiary receives.

3). Pay for long-term medical care. If you become ill and require long-term medical care, your policy may allow you to use an “accelerated death benefit” to help cover the cost.

4). Receive retirement income. Whole life insurance policies often provide the owner of the policy with the option of receiving an annuity while they are still alive as an alternative to providing beneficiaries with a death benefit.

5). Increase the value of your death benefit. As the cash value of your policy increases, you can choose to add the dividends to your policy’s cash value or reinvest them. By reinvesting your dividends, you can more substantially increase the cash value and death benefit associated with your policy.

If your insurer is giving you a hard time with your life insurance, speak to one of our claim advisors at ClaimCounsel to see if we can help.

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CNN Money. “Ultimate Guide To Retirement: What Is Universal Life Insurance?” http://money.cnn.com/retirement/guide/insurance_life.moneymag/index5.htm?iid=EL

Holbrook, Alice. Nerdwallet. “When to Borrow Against Your Life Insurance Policy.” April 2015. https://www.nerdwallet.com/blog/insurance/borrow-against-life-insurance/

Insurance Information Institute. “What are the principal types of life insurance?”


Investopedia.com. “Death Benefit.” http://www.investopedia.com/terms/d/deathbenefit.asp

Khalfani-Cox, Lynnette. AARP. “5 Things You Didn’t Know About Life Insurance.” March 2016. http://www.aarp.org/money/investing/info-2016/life-insurance-things-to-know.html