Investing smartly has always a question under the spotlight.
Some American citizens prefer investing in stocks while others believe in starting their own business. Since all these ways are legit and workable, many people still fear losing money.
To mitigate such risks, many of them look for ways, which are safe and effortless.
Therefore, no wonder why most of them start thinking about going for the life insurance policies.
Standard policies don’t grow unless you add cash value to them. That’s why this article is to help give a broader picture of cash value life insurance pros and cons.
- Cash Value Life Insurance Policy – What’s New?
- Life Insurance Policies with Cash Value
- Term Life Insurance Excludes Cash Value Life Insurance
- How Cash Value Life Insurance Policy Works?
- Growing Your Cash Value in Life Insurance
- Factors Required to Qualify
- Effects of Interest Rate
- Strategies to Get Most Out of Your Cash Value
- Pros and Cons of Cash Value Life Insurance
- Choosing the Right Cash Value Life Insurance
- Buying Life Insurance Policy That Offers Cash Value
Cash Value Life Insurance Policy – What’s New?
The concept has been a few decades old now and has served many policyholders in various ways. Cash value life insurance is similar to a permanent life insurance program, and it comes with a savings option.
In other words, whenever you pay a premium, a certain amount is added to your savings account.
Policyholders can use that amount in several ways. That means, if you are opting for this kind of policy, you can surely enjoy great benefits.
So, if you are still unsure how it works, just grab a cup of coffee because you are about to learn a lot about adding cash value to your life insurance policy.
Life Insurance Policies with Cash Value
The good news is that the majority of life insurance policies allow you to include the cash value feature in it.
On the other hand, it also depends on the company or the insurance provider you are dealing with. One way or another, all reputable insurance firms offer cash value. However, there are only specific plans, where you can add cash value.
- Whole Life Insurance
- Variable Life Insurance
- Universal Life Insurance
- Indexed Life Insurance
So, before going forward, let’s know briefly about all the above insurance plans.
Whole Life Insurance
This is one of the most basic life insurance plans offered by almost every company. In whole life insurance, the insured receives lifetime coverage that ends with a death benefit. This kind of insurance is also called ‘traditional’ or ‘permanent’ life insurance.
In this insurance plan, you are required to pay regular premiums to get a certain amount after your death. There are many benefits of whole life insurance, but the most essential one is the addition of cash value.
Moreover, you can also add riders in case you are unable to pay premiums in the future due to disability or terminal illness.
Variable Life Insurance
Variable life insurance is another permanent life insurance type. With this plan, you can enjoy the investment opportunity, as the policy offers a cash-value account. Each paid premium is invested in various sub-accounts, which act as a mutual fund.
Furthermore, you are allowed to choose your sub-accounts for investment. But keep in mind that this facility is only available if you pick variable life insurance for cash value. And because it is a typical investment account, so you can expect profit and loss going side by side.
For example, if sub-accounts get gains, your cash value will grow, and in case, there are losses, then your cash value will drop as well.
Universal Life Insurance
Again, it’s permanent life insurance with investment and savings elements. Comparatively, to previous types, universal life insurance (UL) comes with low premiums. The premiums are fairly affordable just like the term life insurance.
Depending on your life insurance provider, many insurance organizations offer extremely flexible premium options, whereas, some might ask you to pay a single premium or scheduled premiums.
And most importantly, the premiums are designed by keeping in mind two major components – the insurance amount and the saving option, which ultimately makes this policy acceptable for cash value. As a universal life insurance policyholder, you can also adjust your death benefit.
Indexed Universal Life Insurance
Indexed universal life insurance (IUL) is another form of universal life insurance, so it’s obvious that it has a permanent life insurance nature. In this policy, you can allocate your cash value amount in the equity index account or fixed account.
The word ‘index’ defines that it has some connections with the stock exchange, such as Nasdaq. Therefore, as a policy owner, you get the opportunity to invest in the stock market to grow your investment. This growth can be seen in your cash value; however, the death benefit remains the same.
Term Life Insurance Excludes Cash Value Life Insurance
Term life insurance is pretty simple. You pay premiums for a certain period, and if you live during the entire duration, you are not given any coverage.
But, if you die within the duration, your beneficiaries get the death benefit. This policy is inexpensive as compared to permanent life insurance because the insurers have to bear the minimum risk.
Due to such simplicity and economical rates, there is no option to include cash value to it. So, if the cash value is one of the main attractions why you are willing to buy an insurance policy, then term life insurance is a big no!
How Cash Value Life Insurance Policy Works?
Before going for a cash value policy, you should know how it works. Or, in other words, what is the main factor responsible for generating the amount?
Well! If you have been reading this from the beginning, then it is expected that you would have a little idea about the main mechanism. But, let’s dig deeper to know more.
What happens is every time you pay the premium; a certain amount’s portion is reserved for the death benefit. Similarly, another portion is used to cover all the insurance firm’s operating costs.
So, what happens with the remaining amount? That payment portion is added to your policy plan’s cash value.
This signifies that there are three portions. The first one is utilized for your death coverage, the second is to manage all the official expenses, and the third is included in the cash-value account.
Now, the money saved for the cash value is then invested in conservative yields. Therefore, the more you pay the premiums, the bigger the cash value becomes, and finally, you make good profits by earning more interest.
The next thing that concerns most potential applicants is the level premium. Not sure what a level premium is? It’s a premium type in which you have to pay the same premium amounts meanwhile the death benefit keeps on increasing.
However, this practice is a bit outdated nowadays, as currently, the more your policy grows older, the less your cash value is accumulated.
This informs that in the early years, the cash value policy is excessively advantageous, as you can get higher profits. But, over time, the process gets slow.
Nevertheless, it also depends on your insurance company’s internal policies when it comes to growth and accumulation. There are many insurers, who are found to be doing the opposite of the standard policies.
So, make sure you choose the insurance company carefully because different firms have different plans. It is also suggested to ask all the essential questions from the company’s agent before making any commitments. But, overall, the cash value is a great way to invest in the long run.
Growing Your Cash Value in Life Insurance
Cash value has a straightforward procedure to help build the amount. Although it’s not quite right to claim that this trait in your life insurance can double the benefit, or could exceed the coverage because that would be unrealistic, it still provides outstanding gains if you know how to use the cash value wisely.
So, to understand how money works to make more money, let’s explain it with an example.
You have bought a whole life insurance plan with a $1 million death benefit. You have purchased this policy today when you are only 25 years old. After getting the insurance, you are paying all your payments without any breaks. Therefore, every month a specific portion is being added to your cash value.
This entire cycle is being repeated for the next 30 years, and now you have reached the age of 55. And through all those consistent premiums, the cash value has increased to $500,000. In the same way, after 10 years, when you are 65-years-old, the cash value account has $750,000 in it.
That means, if you are dead at 65, the company will pay the death benefit from the remaining insurance cost ($250,000).
In other words, your cash value will be beneficial for the company, and instead of paying the whole death benefit, it will only have to pay $250,000, as the rest of the coverage will be taken from your cash value.
Factors Required to Qualify
To add cash value to your life insurance policy, you have to go through a series of examinations, as well as, verifications before the insurance company is satisfied.
So, here’s what most insurance firms may scrutinize you with.
Age is the most important factor when applying for any type of insurance. In the case of cash value, your insurance provider will be interested in knowing your real age, as the company will offer you the death benefit on behalf of it.
It is important to remember that the cash value is an additional feature, which is added in any permanent life insurance type.
So, consider the same age rules as you would go through when buying a simple permanent life insurance policy. It is also observed that people, who apply for life insurance at an early age, have more chances to qualify, as the insurance company has more chances of earning.
Important Guides by Age:
Another factor is gender that plays an essential role in deciding your life insurance premium. The companies may evaluate you based on being a male or female and approve you for the life insurance.
It is also noticed that males have to pay higher premiums as compared to females due to several valid reasons, such as the death rate. For example, Statista reveals that 14,689 men and 12,966 women died in 2017 from the 100,000 sample population.
Also, gender could be an issue when applying for cash value if someone falls in the non-binary category. Transgenders are likely to face more rejections in the previous decades, but with time and through federal laws, many insurance firms are now offering insurance to eliminate discrimination.
Nevertheless, such applicants have to go through numerous legal exceptions to qualify for cash value.
Current Health Status
Just like gender, your current health status is a great way to qualify for life insurance. As being authorized to judge you, the insurance companies determine whether or not you are beneficial for them if you have been given the policy.
So, if you are planning to get cash value through any permanent life insurance policy, then better start working out.
Also, try to eat healthy and hygienic food to make sure you pass the medical examination. Similarly, avoid consuming alcohol and tobacco if you wish you enjoy maximized death benefits.
Most people, being smokers and alcoholics, are offered a minimum death coverage while they have to pay higher premiums. Whereas, in some cases, the answer to a life insurance policy is a straight rejection.
Personal and Family Medical History
Yes, it does matter to some insurance providers. If you have been suffering from any critical disease in the past, but now you have been healthy, then insurance providers will see if there are any chances of the disease to attract your body once again.
And if you are presently suffering from any life-threatening illness, then you might not qualify, and you will be asked to choose a typical health insurance policy.
Furthermore, there is a possibility that if any of your family members are suffering from chronic or life-threatening diseases, then it might run in the family line.
According to a book, ‘A Guide to Genetics and Health‘, there are some common diseases, which have been seen running in the entire family. Diseases like Coronary Artery Disease (CAD), hypertension, asthma, diabetes, and cancer are a few examples.
However, depending on the severity, the insurance companies may offer you a cash value policy. But, being oneself healthy is extremely a favorable point that emphasizes the insurers to offer you a worthy policy, although if your family medical history is slightly off the mark.
The weight does affect your insurance benefits, and indeed, it is another qualifying factor for life insurance. Insurance providers will see your BMI, to review the rates.
The better the BMI, the lower the premiums. But, you must keep in mind that when permanent life insurance is selected with cash value, the premiums will be higher. So, a person with a good BMI can negotiate for better rates.
On the contrary, if your weight is going against the insurance company’s policies, then you will be given higher premium rates. It is also wise to know that every insurance company has its own BMI standard.
So, if you think you are overweight, then begin losing those extra pounds to get served in a better way when going for a cash value policy.
Indeed, your occupation does matter! As a cash value policy seeker, your profession will be assumed perilous if it’s riskier and has more chances of premature death. Some occupations, such as fishing, aircraft pilot, and miner, are always at a risk of sudden death.
Similarly, states where prostitution is legal, have a high number of sex workers, but as they are risking their health, insurance companies find themselves vulnerable in offering permanent life insurance policies (with or without cash value traits).
But, if your job or business is safe in terms of deadly hazards, you can qualify without major complications.
Income is not as essential as the above factors, so unless you are unemployed, the insurance companies will consider your application for cash value insurance. Thanks to the federal laws that restrict the majority of the states from accepting or rejecting insurance applications based on income.
Insurers might ask you to provide income and employment proofs, so they can determine your assets to offer the death benefit, or to decide your premium.
Suppose, if you are working in a reputable firm, or have a well-recognized business, then there will be no hurdles in getting the policy. And in the case of the opposite scenario, if you are earning within the legal boundaries, your application will be still regarded.
Just like being a smoker or a non-smoker, drinker, or sober could make a huge difference in your premium and overall cash value death benefit. Likewise, your addictions could affect your cash value insurance program. For example, if you are addicted to gambling, you might not qualify for this life insurance type.
Because the company will think that you will be using the cash value amount for illegal purposes. The same rules will apply if you are addicted to drugs, such as Marijuana, etc.
And if you are considering you can hide these facts, you can’t because the insurance providers will find about your addictions anyway, especially if they are concerned with your health.
Despite a few insurance companies might involve in extreme assessment, leading companies won’t take any risks.
Effects of Interest Rate
Interest rates are already decided by the responsible people, so, more or less, you can expect the offered interest rates somewhere between 3% and 5%. However, lower rates are not profitable for insurers, as they negatively affect the cash value amount of the policyholders.
So for instance, if your death benefit is one million, and cash value is likely to grow when the interest rates are 5%, then with lower rates, you won’t get the big amount. Hence, it is suggested to look for companies, which offer high-interest rates.
Strategies to Get Most Out of Your Cash Value
As you are now aware of what cash value is and how it works, you will be curious to know why this policy is beneficial when it is the property of the insurance company itself.
Well yes, it is, but after your demise.
So, does that mean you’re paying heavy premiums to help your insurance company enhance and flourish?
Yes and no.
If you don’t use your cash value amount, you are probably benefitting the company, but if you know how to use it, then the same amount can even help you pay your premiums.
In this section, you will get know how you can get the advantage of your cash value amount by following a few strategies so that you can leave this world without regrets.
1: Make a Trade
If you are fortunate enough to have a very attractive cash value amount on your permanent life insurance program, then why waste it?
Even if you have no plans using the cash value for any reason, doesn’t mean you should leave your capital for the insurance companies. Instead, you can get your beneficiaries to enjoy more death benefits after you’re gone.
How you can do that? It’s a simple process. All you need to do is to contact your insurer and tell them that you are now interested in going for a trade. Let them know that you are willing to enhance the coverage in return for cash value.
Don’t hesitate when asking for the trade because most insurance companies won’t reject your offer, as they don’t want to lose a client like you. But make sure that your trading objective should be transferring all the cash value amount.
So, for example, you have a cash value in a universal life insurance policy, and your death benefit is $500,000, whereas, the cash value amount till now is $200,000. So, try your best to convince the insurer to add the cash value amount to the main benefit.
In that way, your beneficiaries will get an extra amount. And if you think that your insurance company is stubborn, try to negotiate, and always remember, they will ultimately have to fulfill your request.
2: Pay Your Premiums
If you think that strategy one is way too difficult (although it’s not), then let the cash value pay most of your premiums. Oh yes, that’s way more possible; in fact, this strategy even has special terminology called ‘paid up’. But, you have to have some patience and let the cash value reach a good amount.
Once it’s big enough, you can request the insurance provider for the paid up. Also, this request is easily acceptable, and you can save around $2000 to $3000 annually that you spend on paying premiums. So all you have to do is to request and it won’t be dishonored.
3: Get a Loan
In general, when someone takes a loan, the person has to pay back the actual amount along with the interest rates. And most of the time, the return becomes heavy, which even makes the dead cry in the grave.
However, fortunately, when you have a sizable amount in your cash-value account, you can get it all in the form of a loan. And the best part is, you are not liable to return it, although you can pay it back if you want to.
But before you do the victory dance, you should know that whatever the cash value amount (along with the interest rates) is taken as a loan will be deducted from the death benefit.
For instance, if your cash value is $200,000 and your death benefit is $500,000, and you have requested a loan on the entire cash value, then your beneficiaries will only receive $300,000 death coverage, as $200,000 will be deducted by the company.
4: The Withdrawal Option
Similar to strategy three, you can also withdraw the full or half of your cash value amount. But if you opt for the withdrawal option, you cannot return it, and then the withdrawn amount is lessened from the death benefit.
It is also noticed that some insurance providers have different ways of subtracting the amount upon withdrawal. So, if you are willing to withdraw the cash value, then better discuss it with the insurance company before applying for the policy.
But, regardless of reduction, this strategy can help you financially manage some immediate emergencies.
5: Use Funds for Retirement Portfolio
Recently, cash value policies have become a prominent investment opportunity for people who are worried about their retirement. So, if your cash value account is healthy, you can use the amount for the retirement portfolio.
That means you can invest the funds in many ways, such as bonds, stocks, and securities, and earn dividends or interest on it. The aim is to produce another income stream that is durable so that you can continue paying your expenses even after your retirement.
Although the withdrawn money will be reduced from the death benefit, on the other hand, it will be consumed as an investment that is likely to get huge over time.
6: A Good Way to Surrender
There are times when you feel like pulling yourself out of the policy. Or in simple words, you just decide to surrender your life insurance program because of financial reasons.
Although the option is valid and can be taken, the problem is that standard insurance programs have nothing to offer once you are out of the game.
That means you can’t request the paid premiums if you leave the policy before maturity. Also, your beneficiaries don’t get anything out of it. But, when the cash value is added to your life insurance, you can still have the funds in your account.
For instance, if you have $25,000 cash value and you decide to surrender, you can still keep the amount, although the death benefit will not be provided in this scenario.
Pros and Cons of Cash Value Life Insurance
Now, it’s time to check out the pros and cons before making the final investment decision.
Benefits of Cash Value Life Insurance (Pros)
By now, you have witnessed some important facts about cash value. So, let’s discover the benefits or pros.
#1. Death Benefit
You might be thinking why this point is added to this list when it’s an obvious fact that all permanent life insurance offers a death benefit.
Admittedly, you are right, but in this insurance, you get a full death benefit if you haven’t used any withdrawal or loan strategy.
While, on comparing insurance policy that excludes cash value trait, the privilege your beneficiaries receive comes with deductions, depending on the state laws and insurers’ terms and conditions.
Also, the death coverage is tax-free, which means the beneficiaries are not required to pay tax because the amount is not considered as an income.
#2. Fixed and Flexible Premiums
Another advantage is that your premiums are fixed, and you pay the same amount until the policy reaches its maturity. So, if you have bought the insurance when you were 30, and the annual premiums amounted to around $10,000.
So, even if you are now 60-years-old, you will have to pay similar charges each year. This assures tranquility, as you can manage your budget, and separate the funds for your insurance policy.
Contrarily, some cash value policies also provide flexible premiums. This permits the policyholders to pick the time and amount for paying the insurance premiums. Also, if in case, the insured person is unable to pay the premiums, the cash value amount can be used to pay the dues.
#3. Increased Value
Cash value never stops growing as long as you’re paying the premiums. This is an outstanding characteristic of cash value because it keeps increasing each year.
So, in case you think you need to withdraw the cash value in the future with a specific amount, you can estimate the years and find out when that particular amount will be available by the end.
This allows you to plan your future and you are always prepared to pay for your children’s college fee or any other mandatory expenses without any trouble.
#4. Zero Tax Deduction
Apart from the basic perk that beneficiaries receive a tax-free death benefit, your cash value growth is not questioned by the IRS because it’s a tax-deferred income.
Moreover, if you have taken a personal loan on your cash value, you don’t have to pay taxes either.
The loan will be non-taxable as far as the policy is active. Furthermore, if you are surrendering or withdrawing the cash value, you are only taxed on the amount you have earned from the investment or interest.
#5. Participating Policies
If you are choosing cash value in whole life insurance, you are likely to receive dividends. Those dividends can be added to your account or taken immediately as cash, and even utilized to pay premiums. So, if you have a participating policy, your overall insurance cost becomes less costly.
#6. Adding Riders
Many life insurance types allow you to add riders (For example, Transamerica living benefits) to provide extra features or coverage. The most common rider is the ‘accelerated death benefit’ and some insurance providers automatically include this in your cash value policy.
This enables you to use your cash benefit in case you are suffering from any terminal illness after buying the policy. That means you can pay for your medical bills or any other emergency expenses.
The ideal way to find whether or not your insurance provider has a rider in your cash value insurance policy is to ask them directly before buying it.
#7. Legal Support
Cash-value life insurance is legal in the US. There are numerous laws created for the protection of the insurer and insured. So feel free on purchasing this type of insurance policy because the insurance companies cannot deny your legal claims.
Disadvantages of Cash Value Life Insurance (Cons)
Every good thing has a bad side and so does the cash value policy. There are a few things, which might freeze you for a second to think twice about buying this insurance type. Here they are:
#1. High Premiums
There’s a huge difference in the premiums if you compare the standard permanent life insurance with cash value.
For example, in a normal insurance plan, you might pay $900 a year, but on cash value, you would be paying $10,000 annually. So, there’s a difference of earth and skies between both insurance types.
Note: All the prices mentioned in this article are ‘sample rates’ to help you give a better understanding. Original quotes and pricing details can be asked from your preferred life insurance companies.
#2. Benefit Limitations
Taking loans on behalf of your cash value seems a great way to overcome current financial issues, but, as you are now aware that the borrowed amount is deducted from the entire death benefit. So after your demise, your beneficiaries get the amount that is remaining in the balance.
It won’t matter to those who are already well-settled and have bank accounts full of cash. But if your beneficiaries are not financially stable, the amount they get after cash value deduction may not be sufficient for them to survive or simply carry on with their lives.
#3. High Administrative Fee
Cash-value is known for being expensive in terms of fees. For example, you might pay a high price to manage your investment account. Plus, there are several service charges you will have to pay from time-to-time.
However, this is not applicable in all circumstances. Some insurance companies are pretty easy when it comes to charges, but most corporations are costly. So if you are going to buy any cash value plan, don’t forget to question your agent. Ask him or her about the open and hidden charges.
#4. Low Investment Rates
Normally, when you invest and depend on the interest to gain profit, you typically receive high rates. But, in cash value, insurance firms offer low investment rates as compared to other investment opportunities.
For example, if company A is a financial institution and company B is an insurance organization, and you invest $10,000 in both, then chances are that company A will offer a 5% interest rate, and company B gives you 3%.
Therefore, it is always advised to inquire about the interest rates from multiple insurance providers and choose the one that offers high rates.
#5. Tax on Surrender
Many people think that if they surrender their cash value policy and have taken a loan on it, the amount will still be tax-free.
Oh no! That’s not what it is.
If have taken a loan from your cash value account and now you have surrendered, whatever the amount you have taken out will be converted into an income. That means you will have to pay tax on it. Or else, you will be answerable in the court.
Choosing the Right Cash Value Life Insurance
If you are confused about what permanent life insurance is more advantageous when included with the cash value feature, then this section has all your answers. Just keep in mind that there are four main permanent insurance policies with a cash value benefit.
- Whole life insurance
- Variable life insurance
- Universal life insurance
- Indexed universal life insurance
And all of them serve a different purpose. So, let’s learn what policy could be best for you.
Whole Life Insurance with cash value is for those who look for dependability and coherence. This policy provides these two factors in the form of fixed premiums, and guaranteed benefits, as well as, cash value.
For Conservative and Aggressive Investment Options
Variable Life Insurance policies attract those who wish to have great control over investment risks without losing flexibility. This plan gives multiple investment strategies, ranging from light and conservative to aggressive.
Moreover, this policy even allows policyholders to adjust premiums and death benefit according to their investment goals.
For Tax-Free Savings
If you don’t feel like withdrawing cash value from the insurance policy and want to focus on building some tax-less savings without major risks, then you might admire Universal Life Insurance. In this policy, you can increase your cash value with time and your beneficiaries can enjoy the benefits after you’re gone.
If You Love Playing Stock
And lastly, if you’re planning to grow your cash value by handling your account and investing in the stock market, then the Indexed Universal Life Insurance could be the best-suited policy for you.
Buying Life Insurance Policy That Offers Cash Value
There are many ways to buy a life insurance plan. You can adopt any single or experiment with all to find the best quotes.
Most insurance companies are now available online. You can visit their websites, contact their support team through email, and get quotes.
Many firms also allow you to reserve a meeting with their online agents. You can also process an online application once you agree with the quotes.
Pay A Visit
This is highly recommended! If you have time, you can visit insurance companies to discuss everything about their cash value plans. The insurance agent can help you in the entire process.
But before you do that, you should know that there are two types of insurance agents – independent and captive. Independent agents are certified to personally sell life insurance policies from different companies. Whereas, captive agents are employees for a specific firm, and they only sell a single company’s policy.
You can also get life insurance with the help of interest groups or travel associations, but still, the above two options are more authentic, so it’s better to go with the trusted ways.
Gauge Your Preference
Don’t be too quick on deciding the best policy insurance company for buying a cash value policy. Take a deep breath and do some basic research before signing some papers. Why? Because you should always check the ratings of an insurance company that you think is suitable.
Several rating institutions like Standard &Poor’s and A.M Best are known to be the torchbearers when it comes to choosing an insurance provider.
These platforms rate insurers on basis of financial stability, and the companies, which seem doing well over the past years, are awarded grades, such as ‘A+’ and ‘A’, while off the mark firms may be rated as ‘B’ or even below.
Remember! Always go with ‘A’-rated companies to avoid any future mishaps. Furthermore, do review customers’ positive and negative comments online. A good way to do that is to search your preferred insurance company for reviews with the help of the Better Business Bureau.
Investment or Cash Value?
Let’s answer this question with the following example.
Suppose, Alexa purchased term life insurance for 30-years with an annual premium of $1000. But, James chose to go for the permanent life insurance policy with a cash value option, which makes him pay a $10,000 premium each year for the rest of his life.
That means, Alexa has saved $9000, which she has invested in some other securities, such as the stock market. And as on average, the stock market pays a 7% yield; therefore, Alexa is likely to generate a total of $18,900 in the next 30 years. However, she might look for other options to secure her family’s future after leaving this world.
Conversely, evaluating James’ progress for 30 years, he would have paid premiums worth $300,000. And if the insurance company has offered him 4% interest, then it means the total cash value in his account would be around $12,000.
So, even if the entire cash value amount is borrowed to spend for paying for bills, kids college expenses, or any other necessities, still after the loan deduction, his family will be financially secured after his death, as the beneficiaries will get the death benefit.
Knowing cash value life insurance pros and cons is a great way to analyze how advantageous it could be for you and your loved ones after you are departed from this world.
Many people are interested in adding cash value to their permanent life insurance plans as it allows them to borrow a tax-free amount.
And despite borrowing money on the cash value, policyholder’s beneficiaries can still relish the death benefit after the load has been deducted.
But, this insurance program has high premiums and low-interest rates, which makes the insured person earn less. However, the option is much better than traditional investment opportunities.