The benefit of life settlement policy is available only when the age of the policyholder is 65 years. This rule is considered better than surrender because in this, more money is received than surrendering the policy. In this, the policy is sold to a third party.
A life insurance policy is very much needed for a secure life. If a person is the sole earning member of his family, then life insurance is considered to be the most important investment. If the insured dies, the family and the nominee get many benefits of the policy. A major feature of life insurance is related to earnings. But it should be used for emergency. It is advisable to use a life insurance plan in the form of cash only when there is a great need for money. When there is no way left, you can arrange cash from your policy.
Be it term life insurance or whole life insurance, whatever premium is paid in it, a large corpus or reserve is created. This money is deposited in the account of the account holder. If you withdraw these money in emergency, then keep in mind that it can have serious consequences. A life insurance policy can help its account holder in a number of ways to withdraw money. Here we will know about 5 ways by which you will be able to earn.
1- Withdraw the full amount of the plan
You can withdraw cash from a life insurance policy if you suddenly need a large amount or have to make a big expenditure, such as building a house or investing money in a business. You get two options at the time of withdrawing money. Either withdraw the entire money or you can take some part of it according to the need. How much money you will get will depend on the policy, its premium and the amount deposited. Withdrawal will cause your policy to lapse and the benefits like death benefit will be lost. If you withdraw the amount deposited before 15 years, then you will have to pay tax on it. Also, policyholders below 60 years of age will have to pay a penalty of 10%.
2- Can take loan
If you need money, you can take a loan against your policy. There is a rule to give loan on your plan from the policy company. The money you have deposited as premium will act as security for the loan. How much loan will be available on the policy and how much interest will be charged on it, it will completely depend on the rules of that policy.
3- Surrender the policy
When you are in a state of complete emergency in terms of money, there is no other way, then you can surrender the policy and get cash. After surrendering, you can withdraw your money and withdraw from the policy. Before surrendering, keep in mind that facilities like life cover and maturity benefit will be lost. Your nominee or family will not get any financial security going forward. Life insurance companies charge some surrender charges and reduce the policy amount. If you have taken a loan against the policy, the surrender value may be even lower. You will also have to pay higher interest on the money received.
4- Life settlement
There is a method of life settlement in which your policy is settled with any life settlement organization or individual. In return you get compensation. Under this rule, the settlement organization or individual will pay the premium of your policy and on the death of the insured, he will get all the benefit of death benefit. The benefit of life settlement policy is available only when the age of the policyholder is 65 years. This rule is considered better than surrender because in this, more money is received than surrendering the policy. In this, the policy is sold to a third party.
5- Create your own portfolio
Those who want to earn after retirement can cash out the policy. If you have accumulated a lot of money in term insurance, then you can invest it in equity funds. One can invest the money from a term insurance policy to build up different corpus in your portfolio. This increases the profit potential and can lead to a good amount of money in hand after retirement.
