Cash value plans let you build up savings that you can access throughout the life of your policy, giving you one more way to keep your family covered financially.
Cash value life insurance is a type of policy with built-in savings. You can access the funds while you’re still living and use them in many ways, including paying monthly premiums or covering everyday expenses.
Cash value is a feature of permanent life insurance, which lasts your entire life as long as you pay your premiums. In some cases, you may also be able to build cash value with term life insurance, which lasts for a set period of time.
While cash value plans are typically more expensive than plans that only offer a death benefit, they can provide an extra cash cushion to help with your family’s personal finances and also help grow your savings over time.
Build up money that you can borrow against to pay for big investments or daily expenses, use as collateral for a loan, or pay your premiums.
With cash value options for both term life and permanent life policies, you can choose the coverage that works best for your family.
Just like with any other life insurance policy, you’ll receive your predetermined death benefit to protect your family if something happens to you.
That depends on your financial goals, budget, and unique circumstances. A cash value life insurance policy can be a good way for some families to build their savings and access cash when they need it, but they also are more expensive than standard term life insurance. Talk to an agent to help you weigh your options.
There are several ways your cash value can grow, depending on the policy type. Whole life insurance guarantees a fixed rate of return on your cash value. With universal life, the account’s growth is based on a variable interest rate. Finally, variable life insurance allows you to invest a portion of your premiums into sub-accounts, like mutual funds. Variable policies offer the greatest potential returns, but also carry higher costs and risks. The eFinancial team can help you compare whole, variable, and universal life policies to find the right fit.
Most permanent life insurance plans come with a cash value component. Your options include:
Over the years, your policy’s cash value can eventually grow to reach the full value of your death benefit. At that time, you receive the cash value and your policy comes to an end. With many cash value plans, this is designed to happen when you turn 100. This can get a little tricky, so talk to an agent about your options.
Your cash value provides an optional benefit that you can use as needed during your lifetime. When you die, a typical whole life policy will pay out the policy’s coverage amount as a death benefit to your beneficiary. Some cash value policies may pay the death benefit plus the cash surrender value when you die, but they tend to cost more than other types of policies.
This happens when you withdraw the full cash value available in your policy. If you want the money and no longer need life insurance coverage, you can surrender your policy and receive what’s called the cash surrender value, some of which may be taxable.
Just be aware that if you surrender your policy within the first few years, the fees you have to pay may cost more than the value you’re taking out. You also won’t have life insurance coverage any longer, so make sure you have a plan in place.
It typically takes a few years to accumulate cash value in your life insurance policy. Once your cash value account grows to a certain level, you can take out a loan or cash out the policy if you don’t need life insurance anymore. In some cases, you can also use the cash value in your policy to pay for your premiums.
At eFinancial, we’re dedicated to providing expert, personalized support as you shop for life insurance plans. You’ll have access to high-quality, affordable products from more than 20 insurance companies, so you can choose from a variety of life insurance policies. Our agents will walk you through the approval process so you can get covered as quickly as possible. We’re here to help.
To get started, request your free, no-obligation online quote or call 833-489-1026 to talk with one of our agents.
