5 things you did not know life insurance could do

When you think about life insurance, which usually comes to mind is the benefit of death-money that is paid to your beneficiaries when you die. And this is certainly the main reason most people life insurance.

Keep in mind, however, there are two major types of insurance. Life insurance provides protection for a specific period of time (the "Term") such as 10 or 20 years, and usually pays a benefit only if you die during the term.

Permanent life insurance, by contrast, offers lifetime protection, as long as you pay the premiums. Because it is designed to last a lifetime, permanent life insurance generally accumulates cash value. That means there are significant benefits of living in permanent life insurance, the benefits you can leverage to finance the possibilities of life.

Here are five things you probably did not know you could do with the permanent life insurance.

1. Financing a college education. Over time, your policy accumulates cash value, and you can borrow against the value of money and use it to help pay for college or other secondary education. In fact, you can use the money for anything you want, but the example is here pay for college. No bank loan application. No form of financial aid. Just ask for the money and it is yours.

You can borrow against the value of money and use it to help pay for college or other secondary education.

Exploiting the combination of your policy cash value will impact your death benefits, so be sure to discuss your plans with your financial advisor.

2. Start a business. The harsh reality of starting a business is that banks do not lend money to companies without earnings. This means that you need to fund the business yourself, either from your own savings or by borrowing from friends and family. An often overlooked source of funds for a new business is the cash value of your life insurance policy. If Walt Disney can borrow from his life insurance to create Disneyland, you can use your life insurance to make your dreams come true too.

3. Take time to care for an elderly parent. A mine of talks coworker about how lucky she was to be able to get out of work early in his career to spend time to attend to family matters. She was able to do this in part because it could draw on the accumulated cash value of his life insurance policy.

Contrary to send a child to college or start a business, you can not control when these sorts of family emergencies, but you can make sure you are financially ready when it happens.

4. Get money if you have a chronic illness. If you become chronically ill, and stay badly enough that you can not perform two of six activities of daily life, some permanent life insurance policies can allow you quick access to the death benefit. You effectively get use money from your death benefit while you are alive, then your beneficiary will get any rest when you die.

Of course, this reduces the benefits to your beneficiaries so it is not a substitute for insurance long term care.

5. Expand your 401 (k). Due to the protection offered by your life insurance policy, you might be able to take a more aggressive allocation strategy in your 401K investments. Also, because you can tap into the cash value of your insurance policy to cover the first years of retirement, you can leave the money in your 401 (k) develop much more.

These ideas are not good for everyone. I mention them here only to illustrate some of the ways other people have resorted to living benefit their life insurance. Talk to your financial and professional advisors to ensure that they are appropriate for your situation, but know that life insurance is more than just paying a death benefit.