Life Insurance Greenville SC provides financial protection and peace of mind. It can help pay off debt, cover funeral expenses, or pay for children’s education and day-to-day living expenses.
Many people also buy whole or universal life policies to accumulate cash value, which acts like a savings account. The policyholder can withdraw or borrow against this amount, but it will reduce the death benefit.
A life insurance policy pays a death benefit to your beneficiaries when you die. This is a tax-free lump sum of money that can help cover funeral costs, mortgage payments, and other expenses. The amount of the payout can vary from a few thousand dollars to millions of dollars. This is why people buy life insurance to protect their loved ones against financial loss.
Some policies also have features that can help you during your lifetime. For example, accelerated benefits (also known as living benefits) can help you pay for health care when you are diagnosed with certain conditions, such as cancer or a heart attack. These benefits may be paid from the policy’s cash value or a combination of the premium and the death benefit.
Other features include premium payment waivers, which waive your premium if you are unable to pay it due to illness or disability. These waivers are a great option if you have financial obligations, such as a child’s tuition or your own medical bills. Other riders, such as a chronic illness rider or critical illness rider, may provide additional coverage for you in the event of a serious illness.
The life insurance company will usually pay your death benefit within two months of receiving proof of your death and verifying the beneficiary. This period is called the contestable period and it gives the insurance company the right to review your death certificate and investigate the cause of your death. This is important because it allows the company to check for errors or omissions that may affect your death benefit.
If you have a whole life policy, the death benefit is usually payable as a lump sum or as an annuity. You can choose how you want to receive your death benefit, and the money will earn interest over time. If you don’t use the entire death benefit, you can withdraw the unused portion from your account or invest it.
If you want to leave a portion of your death benefit to charity, be sure to write this in your will. It’s best to set up a trust for this purpose so your family doesn’t jeopardize government benefits, such as Medicaid and Supplemental Security Income (SSI). You can also leave the money to a charitable organization of your choice.
It has a cash value
A portion of each premium is deposited in the cash value, which accumulates on a tax-deferred basis. This money can be used for a variety of purposes in your lifetime, but you must pay back any loans you take out of it or your death benefit will be reduced. The amount of time it takes for your policy to build up a substantial amount of cash value depends on the type of life insurance and its interest accrual method. It can also depend on the investment subaccounts you choose, and whether your insurer offers fixed or variable rates of interest.
In some types of permanent life insurance, the policy’s cash value will grow over time and eventually equal or exceed the death benefit. This is called a “nil-cost” policy, and it may provide some flexibility for the owner. However, this option often requires a hands-on approach to managing your policy, and it has lower net interest rates than other options.
Most whole life insurance and some universal life policies earn a guaranteed minimum rate of growth for the cash value. Other policies, such as variable universal life, allow you to choose the underlying investment options that determine your cash value. These options come with some risk, and the performance of your investments may affect your death benefit.
Some permanent life insurance policies will let you borrow against your cash value or withdraw it. This is usually only allowed up to a certain level, which is typically based on the total amount of premiums you’ve paid, minus any withdrawals or dividends you’ve received. If you borrow too much, the company might cancel your policy or reduce your death benefit to compensate.
You can also use your life insurance’s cash value to increase the death benefit if you choose to stop paying premiums. This is often known as a “paid-up addition.” You will have to pay the interest on any outstanding loan, and this will reduce the death benefit of your policy after you die. The remaining death benefit can be paid to a beneficiary.
It has a tax-free death benefit
Life insurance works by paying a financial payout (often equal to your coverage amount) to your beneficiaries after you die. This money can be used to pay for funeral costs, mortgage payments, education expenses, or anything else your beneficiaries want it for. Some life insurance policies have additional features, such as a cash value that builds over time and can reduce your premium or increase your death benefit. You can find a policy that best suits your needs by choosing a term or permanent policy, a level or increasing death benefit, and a maximum guaranteed premium rate.
You can also get a whole life insurance policy with flexible premiums and a tax-deferred cash value. This is an excellent option if you plan to use your life insurance policy as part of your estate planning. You can change the premiums and death benefit, and you can even borrow against your policy’s cash value. However, you must be aware that the loan will have interest charges and your death benefits may decrease as a result.
If you choose to borrow against your death benefit, you will need to provide the beneficiary with a statement of values and other information. This is to avoid any confusion about the death benefits after your death. Beneficiaries should be informed of the amount of the death benefit that will be reduced by any outstanding loans and must receive approval from the insurer before the loan can be made.
Some life insurance policies have a feature called an Accelerated Death Benefit that lets you access some of your death benefits while you are alive. This option can be a good choice if you have a terminal illness and are in need of immediate care. However, it is important to consult a tax professional before accessing these funds.
Life insurance policies are contracts between an insurer and the policy owner. These contracts usually include a clause that states that if the policy lapses, the company will return any outstanding cash to the beneficiaries. You can renew a lapsed policy within a certain period of time, but you will have to pay the overdue premium with interest. If you fail to do so, your policy will lapse and you will not be able to claim the death benefit when you die.
It has a contestable period
During the contestability period, life insurance companies may investigate a claim and review the information provided on the policy application. This is a standard practice that helps to protect insurers against fraudulent claims. However, it also means that you should be honest on your application and understand the terms of the policy. If you are not, it could lead to a denial of the death benefit for your loved ones. Life insurers typically cite policy delinquency, material misrepresentation, contestable circumstances or documentation failure as reasons for denying a life insurance claim.
In the two-year contestability period, an insurance company has the right to review a life insurance claim and investigate whether a policyholder made any material misrepresentations or omissions on their application. This helps to prevent insurance fraud, but it does not stop honest policyholders from receiving their benefits. Despite this, some insurance companies have been known to investigate a claim even after the contestability period has expired, especially if they suspect fraud is involved.
However, it is important to note that the life insurance contestability period does not mean that a company can deny your claim after your death. Although the insurance company has the right to investigate a claim during this time, they are still obligated to pay out the claim if there is no evidence of fraud.
The insurance company will usually conduct a thorough investigation during the contestability period, which can delay the processing of your death claim. In addition, the insurance company will be more likely to investigate if you switch policies during the contestability period or transfer your policy from one company to another.
While some minor mistakes can be forgiven, you should always be as straightforward as possible on your insurance application to avoid getting a denial. You should never purposely lie on the form or withhold information, as this is considered fraud and will not be tolerated. In some extreme cases, the insurance company may withhold or reduce a death benefit if they discover fraud even after the contestability period has ended. It is important to read your policy carefully or ask a knowledgeable agent for help if you have any questions about your life insurance policy.