3 Unexpected Uses for Life Insurance

By Heather McKinnon

It’s not fun to deal with financial issues and plan for life after you’re gone, but that’s part of being financially secure. Instead of feeling overwhelmed, consider these surprising ways your life insurance policy might help.

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If you’re a member of the military and are severely injured in the line of duty, the severe injury benefit from your USAA term policy can help pay for your recovery. For example, after Matt Smith was wounded in Afghanistan, he and his wife, Megan, used their $25,000  benefit for a down payment on a home near the hospital where he did his rehabilitation.

Predicting your future is impossible, but you can be certain that your life will change. Your life insurance needs will change too. Guaranteed insurability riders like USAA’s Life Event Option help you increase your life insurance benefit after events like getting married, buying a home or having a child without having to undergo a physical exam. This can make it easier to keep the right protection in place.

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Let’s say you’ve been paying premiums on your universal life policy1 or 20 years — that’s a lot of equity. You can borrow against that cash value to pay off a student loan, for example, or start a child’s education. If you do, you’ll continue paying your premiums and pay the loan back.

You can also withdraw from your cash value2 by canceling all or a portion of your coverage. This option will likely bear some tax consequences if you get back more money than you paid in premiums.

Speak to a financial advisor first, though. Kenny Sutton, USAA Life Insurance product management director, says you should look at other options before considering accessing your cash value.

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You want to leave something to your to your loved ones after you’re gone. Maybe it’s a vacation house, a vintage car or money to help with their dreams. Or leaving your life insurance benefits to a cultural institution can also keep your legacy — large or small — alive for future generations. USAA recommends speaking with a tax and legal professional if you are considering using your life insurance as a trust or other lasting gift.

Help protect your loved ones with USAA life insurance.

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1. Military Severe Injury Benefit is available to active duty in the United States Armed Forces and United States Armed Forces Reserve. Provides $25,000 to help with the expenses in the event of certain injuries while performing military duties. These injuries include dismemberment and loss of limb function, such as paralysis; loss of vision; and severe burns, as long as base policy is in effect. Rider Form LBR67140ST 05-07 (may vary by state); NY Form NBR67175NY 06-07. Included at no additional cost.

2. The Term Life Event Option Rider is available at no additional cost with a Level Term V life insurance policy. It gives you a one-time option to purchase additional term life insurance upon the occurrence of a Life Event. Additional insurance limited to the lesser of $100,000 or the face amount of the base policy. Additional insurance requires payment of additional premium. Rider expires after 10 years or when insured is age 45, whichever comes first. The rider is subject to issue age limitations and other terms, limitations and conditions. Availability and benefits may vary by state. Form: ICC1598284 03-15 (may vary by state); NY Form LBR98303NY 03-15.

3. Universal Life: LUL69700ST 01-08 (may vary by state). In New York, NUL87859NY 04-08.

Universal Life Insurance is known as Flexible Premium Adjustable Life in some states.

4. Your cash value will reduce by the amount of the withdrawal and, therefore, reduce your death benefit. A $25 charge is assessed for each policy withdrawal.

Life insurance and annuities provided by USAA Life Insurance Company, San Antonio, TX, and in New York by USAA Life Insurance Company of New York, Highland Falls, NY. All insurance products are subject to state availability, issue limitations, and contractual terms and conditions. Each company has sole financial responsibility for its own products.