Terminal illnesses are on the rise in the U.S. Cancer deaths are growing faster than many realize and heart disease is increasing each year as well. For many, life insurance policies provide some relief with covering the costs associated with a loved one’s terminal illness. Whether it’s the overwhelming medical costs or the costs associated with a funeral, these policies provide a peace of mind that allows you to focus on your loved ones and the grief that comes with the loss. If you’re wondering how life insurance helps with a terminal illness, keep reading as we explore a few of the benefits.
How Can Life Insurance Help?
There are a number of ways life insurance policies can be used. Some may wish to take a cash value loan on permanent policies, which allows the policy owner to borrow the cash value with interest with the repayment made after the owner’s death. It would deduct the loan and interest from the payout and anything remaining will be paid to the beneficiaries.
Some policies have a surrender value, which allows them to surrender the accumulated cash value of a life insurance policy to the insurance company. Remember, though, there are times when the face value of the life insurance policy is greater than the surrender value. In those instances, a loan as described above could be a better choice. Still, these types of polices have provisions known as living benefits or an accelerated death benefit. This means that if the insured’s doctor says that death will come within two years, the patient can receive what is known as accelerated death benefits. Also, typically these are tax-free options, though you’ll want to be sure ahead of time so that you know what you’re getting into.
Another Option
There also exists a viatical settlement. These aren’t typically a first choice, but it basically means that the owner of the policy sells the policy to someone else for a percentage of the policy’s value. Due diligence matters in these types of decisions, so be sure to explore the potential repercussions. In fact, many policy holders ensure that are other options in place so that they don’t have to bring in a third party.
Dealing with a terminal illness is difficult enough, but when proper insurance policies are in place, it can ease some of the burden from a financial perspective. Most of us simply want to focus on making the most of the time we have with our loved ones. Financial difficulties feel invasive and even unimportant when compared to what we’re facing.
Reach out to a qualified estate planning lawyer to learn more about preparing for these life events and ensuring the proper legal documents and insurance policies are in place before tragedy strikes. It can allow you to prevent the kind of distractions that mean time away from your loved ones when they need it most.
To learn more, please download our free New Hampshire Advance Care Planning here.
Daniel DeBruyckere
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