CAN the befits of term life insurance be accessed?
A Term Life Insurance policy pays out a lump sum only on the death of the insured person while the policy is in force. If your wife survives until the expiry date of the policy at age of 85 or you cancel .
Question: I own an Asteron Term Life insurance policy on my wife. She is 50, I am 64. Our children are independent. The policy has no surrender value and would presently pay about $600k on my wife’s demise. It was taken out in September 1993. Can I access some of the payout figure by reassigning the policy? Or by other means? If so, what are the pitfalls? the policy you will receive no payout. There is no cash value unless your wife dies while the policy is current. In the event of your wife’s death, proceeds would be payable to you tax-free.
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Sometimes, Term Life policies have features that payout a lump-sum benefit on your inability to work again. These benefits usually expire at age 65. Term Life insurance premiums are Stepped or Level Premium contracts. Stepped premium contracts become progressively (prohibitively) more expensive as you get older. With Level premium contracts, the premiums do not change, but start at a higher rate. Your wife may outlive your capacity to afford the premiums!
The purpose of insurance is to make sure money is available to maintain the status quo or at least make things financially manageable for those left behind. If you originally established it to discharge debt on the home and provide funds to look after the kids, you could argue that, as your home is now debt-free and the children are independent, the insurance cover may no longer be necessary.
Before making any decisions, assess your personal circumstances, determine what is the purpose of retaining the insurance and if you still have an insurance need. Get advice on the appropriateness of your existing policy.