Have you heard about Nelson Nash, Infinite Banking, Becoming Your Own Banker, Bank on Yourself, and want to learn more? Or maybe you’re already using Infinite Banking, but would like to explain it better. We're continuing our series on the basics of the Infinite Banking Concept and answering your "what" questions. Today, we'll unpack, What is the death benefit?

https://www.youtube.com/watch?v=HbpNX3c35bo

So if you want to see the power of the death benefit… tune in now!

Table of contentsWhat Makes Up the Guarantees of the Death Benefit?What Are the Differences Between the Death Benefit Guarantees of Whole Life Insurance and Universal Life Insurance?What Are the Chronic Illness and Terminal Illness Riders, and How Do They Compare to Long-Term Care Insurance?What Effect Do Outstanding Loans, Reduced-Paying Up, or Chronic/Terminal Illness Riders Have On the Death Benefit?What is Human Life Value?What Does Life Insurance Do for Your Estate?Book A Strategy Call

What makes up the guarantees of the life insurance death benefit?The life insurance death benefit is the amount that is guaranteed to be paid out to your listed beneficiary at your death.

What Makes Up the Guarantees of the Death Benefit?

The death benefit is the amount that is guaranteed to be paid out to your listed beneficiary at your death. 

The key to guaranteed death benefit is having whole life insurance, which is permanent. When you have whole life insurance, you’re in a position where you know that the death benefit will pay out at whatever point you die, between now and the end of that policy. And at the end of the policy, if you are still living, the insurance company still guarantees the death benefit to pay out to you. This is not the case with term or even universal life insurance (which claims to be permanent). 

This also means that when you pay premiums, you’re paying into your policy with the certainty that you’ll get a “return.” Whereas with term insurance, you can pay into it for 20 years and never see a dime back. 

What Are the Differences Between the Death Benefit Guarantees of Whole Life Insurance and Universal Life Insurance?

While both whole life insurance and universal life insurance are technically permanent insurance, universal life insurance has several variables that can cause a policy to implode or lapse. In other words, universal policies are typically not permanent in practice.

One of the major factors that makes universal life difficult to maintain is because it has flexible premiums. While many people assume that this gives them the flexibility to pay whatever they want, that’s not the case. So if you choose to pay less, you can underpay for your insurance coverage. This then eats into your cash value account, which may implode the policy if you continue to under-fund it. 

With whole life insurance, premiums are guaranteed as well. This means that they cannot increase, so your base premium will always be enough to cover the costs of insurance. You won’t risk underfunding your policy, and you have the freedom to pay more in the form of PUAs if you wish. 

What Are the Chronic Illness and Terminal Illness Riders, and How Do They Compare to Long-Term Care Insurance?

The chronic illness and terminal illness riders allow you to use your death benefit while you’re still living. If a physician certifies that you have an illness that will cause your death, many insurance companies now grant access to the death benefit while living at no additional cost. 

Long-term care insurance is an additional cost, as well as some additional stipulations about when you can use it. Plus, the insurance company can increase premiums over time because of the costs when you have Long-Term Care. While we want companies to be able to offer the coverage, they do have to stay in business.

What Effect Do Outstanding Loans, Reduced-Paying Up, or Chronic/Terminal Illness Riders Have On the Death Benefit?