5 unexpected benefits of life insurance

Life insurance may be best known for providing cash in the event of an individual's death, but today's policies often come with valuable features beyond the death benefit.

Here are five unexpected ways you may be able to cash in on your life insurance policy.

1. Immediate access to cash

Whole life and universal life policies have an investment component that builds a cash value which can then be borrowed against for any reason. For example, individuals may tap into their policy's cash value to pay for the following.

• Pay for retirement expenses
• Start a small business
• Cover a child's college tuition

Regardless of the reason, you may be able to tap into the value of your policy for immediate access to cash whenever you need it. In addition, the amount borrowed, up to the total of your premiums paid to date, may be tax-free.

2. Long term care benefits

Life insurance companies have started offering combination policies that offer both life coverage and long term care insurance in one product.

However, even if you don't have a combination product, you may be able to pay for long term care with your life insurance. Some term life and whole life policies allow for accelerated benefits in the event an insured individual needs long-term custodial care.

3. Living benefits for the terminally ill

In addition, you may be able to receive accelerated benefits in the event you are diagnosed with a terminal illness. Known as living benefits, this feature sometimes must be purchased as a rider but is increasing offered as a standard feature on many life insurance policies.

Living benefits provide a lump sum payout - often 50 percent of the death benefit - to a terminally ill individual.

4. Income in the event of a disability

If you have a disability income rider, you don't have to be terminally ill or require long-term care to get an early pay-out from your life insurance.

While not standard on many policies, a disability income rider can supplement long-term disability or critical illness insurance by providing cash payments in the event you become disabled. Depending on the rider terms, the disability may need to be related to an accident or it could be the result of an illness.

5. A full rebate

Finally, some term life insurance policies will refund your entire premium amount if you come to the end of the term without claiming any benefits. Known as a return of premium rider, you will likely pay higher life insurance rates for this feature, but the promise of getting all your money back in the end may make the cost worth it.