Cash value life insurance is a type of permanent life insurance, which means that it provides coverage for the entirety of the policyholder's life as long as premiums are paid. In addition to providing a death benefit to the policyholder's beneficiaries, a cash value life insurance policy also includes an investment component that allows the policyholder to build up a cash value over time. This cash value can be accessed by the policyholder during their lifetime through policy loans or withdrawals.
The way that cash value life insurance works is that a portion of the premiums that the policyholder pays are invested by the insurance company, typically in a range of investment options such as stocks, bonds, and mutual funds. The policyholder's cash value is then the accumulation of these investments, less any fees or charges assessed by the insurance company. The policyholder can access their cash value through policy loans or withdrawals, and they can also choose to surrender their policy for its cash value.
One of the key advantages of cash value life insurance is that the cash value is typically tax-deferred, meaning that the policyholder does not have to pay taxes on the growth of their cash value until they access it. This can make it an attractive investment option for those looking to save for the long term. However, it's important to note that taking out policy loans or withdrawals will reduce the death benefit paid to the policyholder's beneficiaries, and surrendering the policy will result in the loss of the death benefit altogether.
The way that cash value life insurance works is that a portion of the premiums that the policyholder pays are invested by the insurance company, typically in a range of investment options such as stocks, bonds, and mutual funds. The policyholder's cash value is then the accumulation of these investments, less any fees or charges assessed by the insurance company. The policyholder can access their cash value through policy loans or withdrawals, and they can also choose to surrender their policy for its cash value.
One of the key advantages of cash value life insurance is that the cash value is typically tax-deferred, meaning that the policyholder does not have to pay taxes on the growth of their cash value until they access it. This can make it an attractive investment option for those looking to save for the long term. However, it's important to note that taking out policy loans or withdrawals will reduce the death benefit paid to the policyholder's beneficiaries, and surrendering the policy will result in the loss of the death benefit altogether.