• No one looks forward to the proceeds of a life insurance policy but it does help the family to survive.thai funeral image by Adrian Hillman from Fotolia.com
  
  Life insurance is a valuable asset whether you use it in a business or for your family. Not all life insurance policies have the same benefit. Whole life or universal life policies offer additional benefits besides just the insurance value. Various riders also add more benefits to the policies. No matter what your age, there is a benefit that fits your situation.
  
  

Death Benefit

• People purchase life insurance primarily for the death benefit. The death benefit provides funds for mortgage retirement, debt reduction, childcare, education and living expenses if the insured dies. It also pays funeral expense and extraneous medical bills.
  
  

Tax-Free and Creditor-Resistant

• The thought of getting income tax-free money is a delight, but with life insurance someone must die before it happens. Even though no one wants funds that way, it's nice to know that your beneficiary receives the full benefit of the policy and doesn't have to share it with Uncle Sam. Even if you owe a large amount of money, your creditors can't touch the proceeds if they go to a named beneficiary instead of your estate.
  
  

State Estate or Inheritance Tax

• Many states don't count life insurance proceeds as part of the taxable estate as long as you don't name your estate as beneficiary. Since the tax rates and amount of exemption varies by bloodline and marriage in some states, using life insurance to provide assets for a co-habitant, not related by marriage or bloodline, provides a dramatic tax savings.
  
  

Accelerated Death Benefit

• The accelerated death benefit, also known as the terminal illness rider, is part of most life insurance policies today. Most companies also allow you to put it on older policies without any charge. If you're terminally ill with a year or less of life expectancy, the insurance company allows you to use a percentage of the death benefit for anything you want. When you die, your heirs receive the rest of the money. The percentage varies but normally runs between 50 and 75 percent.
  
  

Guaranteed Insurability

• Once you have life insurance, the company cannot cancel it even if you're sick, unless you don't pay the premium. To cover that potential, life insurance companies offer a rider that pays the premium if you're disabled. If you have cash value life insurance, the company borrows from the cash value for premium payment if there's enough available.
  
  

Cash Value and Dividends

• Not all policies have cash value. Term policies are pure insurance but they cost very little. Whole life and universal life have a saving and investing portion that grows. The funds grow tax-deferred and if you borrow them, rather than cash in the policy, you receive the funds tax-free. However, once you surrender the policy, the cash growth that's more than the premiums you paid receives taxation. The Internal Revenue Service considers dividends a return of excess premium so they aren't taxable but any interest that accumulates on them is taxable.
  
  

Business Use

• Businesses use life insurance in a number of ways. If the business is a partnership or closely held corporation, life insurance can provide funds for the remaining partners to purchase the company from the family of the deceased. If there's a key man whose death would disrupt the business flow, life insurance offsets that cost if he dies. Life insurance also provides executive benefits. If the executive dies before retirement, the proceeds go to the company and they pay the family an agreed amount. If the executive lives beyond retirement, the company uses the cash value to pay the employee retirement benefits.