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United American has been a prominent Medicare Supplement insurance provider since Medicare began in 1966. Additionally, we’ve been a long-standing participant in the task forces working on Medicare Supplement insurance policy recommendations for the National Association of Insurance Commissioners.

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United American Insurance Company has been a market leader in providing insurance to employer and union group sponsors for 25 years.

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Because of our 50+ years of experience in providing life, supplemental health and Medicare Supplement insurance, United American offers superior customer service to both our agents and customers.  Never stress about your claim status with our online claim tracker. Need more help? Let one of our licensed agents assist you.

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Articles Navigate the complexities of insurance with industry-leading professionals.

Do All Life Insurance Policies Have a Cash Value?

Do All Life Insurance Policies Have a Cash Value?

When we think of life insurance, we often think of it simply in terms of a policy that pays a benefit to a named beneficiary upon the death of the insured. It's often a plan that can help families continue their way of life if a parent dies, especially if that parent is the primary earner for the family.

What doesn't always come to mind with life insurance is that in many cases, it can also be used as a financial tool if it's a policy that builds cash value. But do all life insurance policies build cash value? It depends on the policy. 

Types of Life Insurance

There are two categories of life insurance: term life insurance and permanent life insurance. Like their names imply, term life insurance provides coverage to the insured for a certain period of time; permanent life insurance provides coverage to the insured for his or her whole life.

There are three different kinds of permanent life insurance: whole life, universal life, and variable life. Generally, these permanent life insurance policies build cash value. Term life insurance policies can also have a cash value feature. It's important to have a thorough understanding of any life insurance policy you buy, particularly if it has cash value and how it accumulates.

How Does Life Insurance Build Cash Value?

The cash value of your life insurance policy builds when you pay your premium. A portion of your premium will go toward the death benefit, a portion will go toward the cash value, and a portion toward expense charges.1

Why Build Cash Value?

Once you've been paying your premiums for a certain period of time and have accumulated enough of a cash value, you can use that cash value for a number of things. You can use the cash value to take out a loan, pay your policy premium, or increase your retirement income.

If you use the cash value to take out a loan, according to Forbes, it's tax-free and it can be paid back with interest.2 Forbes also notes that "if you make a withdrawal, there are no taxes as long as your withdrawal is less than the portion of your cash value that's attributable to premiums you've paid," and "if your withdrawal is greater, you'll owe taxes on the difference because those are investment gains."

If you do not pay back money you take out as a loan, it can reduce the death benefit of the policy.

Different policies accumulate cash value differently, and it's important you understand how your policy works. If you have any questions about your policy or if you're thinking of purchasing a policy that builds cash value, contact a licensed insurance agent.

Sources:
1 Forbes, What to Know About Cash Value Life Insurance, 2020
2 Forbes, Forbes Guide to Whole Life Insurance, 2020

Not all life insurance products offer the ability to take a loan on the policy. Loans and premium payments may change due to the type of policy that is selected by the customer.

Life insurance is an essential part of your financial plan.

Choose a company that understands your needs and puts you first.

The purpose of this communication is the solicitation of insurance. United American Insurance Company is not connected with, endorsed by, or sponsored by the U.S. government, federal Medicare program, Social Security Administration, or the Department of Health and Human Services. Policies and benefits may vary by state and have some limitations and exclusions. Individual Medicare Supplement insurance policy forms MSA10, MSB10, MSC10, MSD10, MSF10, MSHDF10, MSG10, MSHDG, MSK06R, MSL06R, MSN10 and in WI, MC4810 and MC4810HD, MC4810HDG are available from our Company where state-approved. Some states require these plans be available to persons under age 65 eligible for Medicare due to disability or End Stage Renal disease (ESRD). You may be contacted by an agent or producer representing United American Insurance Company, PO Box 8080, McKinney, TX 75070-8080. OUTLINE OF COVERAGE PROVIDED UPON REQUEST.

For Ohio, you may verify the agent/broker and United American Insurance Company by contacting: The Ohio Department of Insurance 50 W. Town Street, Third Floor - Suite 300, Columbus, OH 43215. Consumer Hotline: 1-800-686-1526 or TDD Number: (614) 644-3745. For costs and complete details of coverage call or write your insurance agent or the company (whichever is applicable).

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