I have seen posts on Instagram about life insurance that lets you use the money while you are still alive. This might be a silly question, but how do you find this type of life insurance? I am sure it is more complicated than it sounds. Does anyone know if it is hard to get this kind of life insurance? Also, what are the restrictions or the catch?
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Some policies have conditional terms. For instance (and I’m completely making up numbers here), say you insure yourself for $100,000, which means your dependents will get $100,000 when you die.
Well some plans could say “We’ll pay out $100,000 if you die in the first 10 years of your plan, but if you pay your premiums for those 10 years with no issues, then we’ll increase the payout to $250,000.”
Some other plans could have an inverse of this condition, basically to say “We’ll pay out $100,000 from your plan, and after 10 years, $10,000 will be available to withdraw from the plan, but taking out money from your plan early will reduce your payout on death by $2 for every $1 you take out.” Or if you take $10,000 out of your plan, then your family would only receive $80,000 on a pay out.
In life insurance plans, look for “accelerated death benefits” or “living benefits.” In the event of a terminal disease diagnosis or other circumstances, these permit access to cash. Obtaining it isn’t difficult, however there are limitations and possible costs. Seek advice from a financial expert for specific recommendations.