I have a nice size Life Insurance policy that I purchased years ago so I would be able to leave my children and grandchildren a little money when I die. I'm pretty sure I have the accelerated death benefit rider on it which means since I have a terminal disease I may be able to take out some of the policy money now to use for whatever I want to use it for. I've been doing some research on the Riders and I will call my insurance company and find out more and if I'm eligible to take out some of mine. I read that some people have used some of theirs to fulfill some wishes on their bucket list...that could be interesting.
@Babs Hunt Most life policies, especially long-term policies such as Whole Life, offer the option of pulling some money out as a "loan" against the policy's equity. No obligation is enforced requiring pay-back of the loan. They simply deduct it from the death benefit when it becomes payable. You might want to look into that. Frank
I lean on Investopedia to give me an overview for this type of stuff. The main cautionary notes they throw out (in addition to the obvious one of reducing the payout for beneficiaries) relate to the government including the payout income for Medicaid eligibility, and the dollars might be Federally taxable if you don't meet the Fed's definition of a "qualifying individual." It is an intriguing idea. I don't have children and was only married briefly, so I've never waded through the world of life insurance.
On Breast Cancer. Org's Forum I remember reading a post from one of the members who was able to do this with her policy. She used what she took out to do some traveling to places she had always wanted to see. And I thought at the time how wonderful that would be to just have the means to be able to do some things like that. None of my children need the money from my life insurance policy but I would not take out what I have set aside for them and my grandchildren anyway. My Honey and I would use some I set aside for him to enjoy. He said if I can do this he would like it that we could enjoy things together while I am still here. So yes I will be checking with my Insurance soon to see what it would involve to do this and even if I am eligible.
I think that @John Brunner has an excellent point about checking to see what effect this might have on your insurance covering your medical expenses. I have heard about people taking the money out, and then they had to use it to pay for medical expenses instead of having medicare pay it, which would totally ruin what you want to do with the money. Another option, which @Frank Sanoica mentioned, would be to take out a policy loan , which has about the same effect, except you would be able to use that money in any way you wanted to do. The loan does not have to be paid back, and your beneficiaries still get the balance of the life insurance policy. Talk with your life/health insurance agent, and he should be able to advise you how best to do this.
Years ago I was in a position where Ineeded some emergency funds. I had recently received a statement from my life insurance carrier that included a statement of the amount of money available for loan, It was more than I needed so I took the loan for what I needed, About 2 years ago I got a letter form the company that if I didn't make payments on the loan I'd have a reduced benefit(or some such stuff). I asked my financial advisor what I should do. He called the insurance company and After finding out that I had paid more in premiums than the policy would pay, he advised me to cancel for the cash value of the policy. I did just that because I don't need insurance anymore.