Everyone buys life insurance with different goals in mind. Mapping out these goals ahead of time can help you narrow down which type of life insurance is right for you and which benefits you are looking for.
If you are hoping to establish financial security for your loved ones after you pass, investing in some type of life insurance is worth it. You can support your living financial goals with a life insurance investment using the cash value component – these policies are not just limited to helping protect your family after you're gone. Read on to learn how a life insurance investment works and some types of policies that let you leverage cash value.
Types of Life Insurance Investments
Some types of life insurance policies you can use as an investment include:
Whole life insurance
Whole life insurance is a type of permanent policy that lasts the entire life of the policyholder. Aflac’s whole life insurance provides whole life coverage and offers the policyholder the ability to accumulate cash value in a tax-deferred account.2
In some cases, you may be able to borrow against this value in the form of a loan. This value grows at a higher rate because taxes aren’t taken out, giving you greater borrowing potential.3
Universal life insurance
Universal life insurance is a permanent plan that gives you flexibility. You can increase or reduce your premiums, cash value, and death benefit as needed.
Variable universal life insurance
With this type of permanent life insurance plan, you can invest your cash value into different kinds of funds and indexes of your choosing.4 Like universal life insurance, you can adjust your premiums and death benefit.
Indexed universal life insurance
Indexed universal life insurance also allows you to invest the cash value component, which can grow based on stock performance. This type of plan offers flexible coverage that will last your lifetime.
Is a life insurance investment worth it?
Using life insurance as an investment can be worth it if you want added financial security for you and your family. The cash value component can give you access to funds as needed, whether you want to withdraw funds, take out a policy loan, or supplement your retirement income. Compare types of permanent life insurance policies and the coverage they offer to decide whether a life insurance investment is worth it for you.
How a life insurance investment works
Life insurance with cash value can be used as an investment tool. As you pay premiums, a portion goes toward your cash value, which will grow over time. Once you’ve built up enough cash value, you can access it in several ways, including getting a policy loan and withdrawing funds. Permanent life insurance policies like whole and universal life insurance offer cash value that can make them useful investment tools.
Ways to use life insurance as an investment
Here are some ways you can leverage your life insurance policy’s cash value while you’re still alive:
Get a life insurance policy loan
Once you have sufficient cash value, you can get a loan from your life insurance policy using the cash value as collateral. With a policy loan, you can pay back what you owe at your own pace. But if the loan amount exceeds your cash value, your policy may lapse.
Withdraw funds from your policy
The cash value component also allows you to withdraw funds from your life insurance policy. You can use these funds to cover any expenses. Keep in mind that withdrawing from your cash value will reduce the death benefit.
Supplement your retirement income
If you save up enough cash value, you can add it to your retirement portfolio and use the funds to supplement retirement income. Consider growing your cash value for several years before tapping into the funds to grow your nest egg.
FAQs
When you're facing a serious illness or accident, supplemental insurance policies can pick up where major medical leaves off by paying for out-of-pocket expenses and even helping with everyday expenses – all for a regular monthly premium.
Does Aflac deny pre existing conditions? ›
Pre-Existing Conditions Limitation: Aflac will not pay benefits for any period of disability that results, directly or indirectly, from Sickness or Injury for which you, during the 12 months prior to the most recent Effective Date of your insurance, incurred expenses, received medical treatment, took prescribed drugs ...
Does Aflac really pay out? ›
Aflac pays policyholders directly,
unless otherwise assigned, to help with out-of-pocket expenses such as: Travel costs for treatment. Mortgage or bill payments while out of work.
How much is aflac supplemental insurance? ›
Many Aflac policies range anywhere from $8 to $25 or more per month. You can contact Aflac directly for more information on specific supplemental insurance plans that pique your interest.
What is a good amount of supplemental life insurance? ›
How Much Supplemental Life Insurance Do I Need? Financial experts and insurance companies recommend having seven to 10 times your annual salary in life insurance, so if you earn $75,000 per year, the guideline would be $525,000 to $750,000 in coverage.
What is the average cost of a supplemental plan? ›
The average Medicare Supplement plan costs in every state
State | Monthly Cost | Rank from least expensive (1) to most expensive (51) |
---|
California | $162.93 | 45 |
Colorado | $127.76 | 29 |
Connecticut | $227.06 | 49 |
Delaware | $150.99 | 42 |
29 more rowsOct 4, 2023
How much does Aflac pay for MRI? ›
ACCIDENT-ONLY MAJOR DIAGNOSTIC AND IMAGING EXAMS BENEFIT: Aflac will pay $150 when a Covered Person requires one of the following exams for Injuries sustained in a covered accident and a charge is incurred: computerized tomography (CT scan), computerized axial tomography (CAT), magnetic resonance imaging (MRI), or ...
How much will Aflac pay for outpatient surgery? ›
This benefit is limited to one payment per calendar year, per covered person. No lifetime maximum. Surgical Benefit Aflac will pay $100–$2,000 when a covered person has surgery performed for a covered sickness in a hospital or ambulatory surgical center based upon the Schedule of Operations in the policy.
How much does Aflac pay for a mammogram? ›
In the case of this plan, the mammogram benefit is limited to $100 and can pay out once per year. In order to receive the $100, you must submit a claim.
How far back will Aflac pay? ›
We will pay the amount shown when, because of a covered accident, you are injured and those injuries cause confinement to a hospital for at least 24 hours within 90 days after the accident date. The maximum period for which you can collect the Hospital Confinement Benefit for the same injury is 365 days.
Best Paid & Free Alternatives to Aflac Incorporated
- Lumity Benefits Solution.
- Insperity.
- ADP Comprehensive Services.
- Deloitte Consulting.
- Lever Talent.
- ADP Workforce Now Comprehensive Services.
- Mercer.
- OutSail.
What does Aflac not cover? ›
Pre-Existing Conditions Limitation: Aflac will not pay benefits for any period of disability that results, directly or indirectly, from Sickness or Injury for which you, during the six months prior to the most recent Effective Date of your insurance, incurred expenses, received medical treatment, took prescribed drugs ...
Why do people buy supplemental insurance? ›
Supplemental health insurance plans are health care plans used to cover anything above and beyond basic medical coverage. These plans provide extra medical coverage and can also be used to contribute to other costs not covered by your primary insurance plan such as copayments, coinsurance, and deductibles.
Will Aflac cover pre-existing conditions? ›
Disability caused by a Pre-existing Condition or reinjuries to a Pre-existing Condition will not be covered unless it begins more than 12 months after the Effective Date of coverage.
Who needs supplemental insurance the most? ›
People at high risk for conditions such as heart disease, stroke and cancer should consider critical illness insurance. These plans help pay the costs associated with serious illnesses such as cancer and heart disease. The plans pay a lump sum for diagnoses specifically listed in the policies.
What age should you get supplemental insurance? ›
If you are 65 or older, you may be able to purchase a Medicare Supplement insurance plan during the Medicare Supplement Open Enrollment Period. This period lasts for six months and begins on the first day of the month in which you are both 65 or older and enrolled in Medicare Part B.
Is Supplemental income Protection worth it? ›
If you are looking for more protection, consider adding extra coverage on top of your group long term or individual disability plan. Supplemental disability insurance can be a great add-on for employees who wish to protect a greater percentage of their income, bonuses or commissions.