Editors' pick: Originally published Nov. 3.
By definition, life insurance is a financial cushion that pays out in the event of the policyholder's demise - it's a safeguard that protects loved ones when the unexpected occurs.
But increasingly, life insurance has morphed into a financial planning tool that does much more than offer financial protection to loved ones.
"Life insurance has many other uses that most people don't realize," states Life Happens, a non-profit insurance industry group, in an email to TheStreet. "As long as you pay your premiums, permanent life insurance provides lifelong protection and accumulates cash value over time. As a result, individuals can take advantage of these benefits to help fund life's many possibilities."
How can life insurance brighten your financial picture? For starters, Life Happens offers these benefits - all worth a look:
- Contribute to a college education: Borrowing against the cash value of your policy can provide the funds needed to pay for college or other secondary education.
- Fund a business: Starting a business from scratch is hard. Aspiring business owners can look to the cash value of their policy as a source of initial funding to get their business off the ground.
- Take time off to care for elderly parents: While you can't control the timing of family emergencies, being prepared financially by having life insurance enables you to tap into the accumulated cash value of your insurance policy to take time off to take care of loved ones.
- Provide funds if you have a chronic illness: Some life insurance policies allow you early access to your death benefit if you become chronically ill and can no longer perform tasks of daily living.