What Can You Do With Cash Value Life Insurance?
There are as many different types of life insurance on the market as there are unique needs. For some, a cash value life insurance policy is the best option. Like other types of life insurance, a cash value policy pays out to your beneficiaries upon your death. However, with this type of policy, a portion of your premium is diverted into a separate savings or investment account each month.?
Over time, this cash value accumulates, and you will earn interest on the cash in your account. You can leave the money in the account (and your beneficiaries will eventually receive it) or you can use it for other purposes throughout your lifetime. For example, you can use your cash value life insurance policy to…
Take a withdrawal. You can withdraw money from your cash value life insurance account for any reason. For example, you might suffer a financial emergency, want to purchase a home, or need to cover a child’s college tuition. But keep in mind that your eventual death benefit will become smaller as a result of this withdrawal.?
Take out a loan. Your cash value life insurance policy can provide you with a loan. But if you die before the loan is repaid, plus interest, then your beneficiaries will receive a smaller payout of the death benefit.?
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Pay your premiums. In the event that you suffer a financial hardship, there’s no need to let your life insurance policy lapse. You can use money in the cash value portion of the policy to continue paying the premiums.?
Sell your life insurance policy. Yes, you can actually sell your entire life insurance policy! This isn’t the right choice in every situation, of course, but it is one of the many possibilities with this type of life insurance.?
Surrender the policy. You can actually surrender your policy, and receive all of your cash value back (after fees are paid).?
A cash value life insurance policy isn’t the right choice for everyone, but it does provide the right mix of benefits for some situations. If this option appeals to you, contact our office to learn more about this versatile financial planning tool.?