Cash value: Is it worth it?
When it comes to life insurance, there are two types of policies: term and whole life. Term life insurance is just what it sounds like – the policy covers you for a certain period of time. Whole life insurance covers you for your whole life, and some of them have a cash value option, which lets you tap into the policy before you die.
Among a few other reasons, the cash value can be one explanation as to why whole life policies cost more than term policies. The cash value amount will grow over the life of your policy from interest. If you decide to use your cash value, there are a few ways you can obtain it.
You can use it to cover your premiums.
Once you’ve accumulated enough cash value, you can use some of the money to cover your premium payments. This is also known as being “paid up.”
You can take out a loan against your policy.
In doing so, you would pay it back at a rate that may be less interest than that of a bank. In most cases, you’re not obligated to pay it back. However, the money you owe plus interest is taken out of your policy, thus leaving a lower death benefit amount for your beneficiary. So whatever you take out, your beneficiary loses out on.
You can make a full or partial withdrawal of your cash value.
A withdrawal might lower your death benefit depending on your policy and cash value. Since it depends on the policy, check with your agent to see what the values and reductions would be.
Learn more about the benefits of life insurance cash value or talk to an agent today about your policy’s cash value.
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.