Cash value life insurance

Cash value life insurance rates vary depending on your age, gender, health, hobbies, and how much coverage you need. Generally, cash value life insurance costs more than term life insurance policies because they don’t expire, and a portion of the premium is used to fund the policy’s cash value savings feature, accruing interest over time.

Furthermore, cash value life insurance is offered as 2 separate types of policies: whole life insurance and universal life insurance. Since these policies are structured differently, the cost will vary.

If you’re unsure what the best cash value life insurance policy is for your needs and budget, call to get a free life insurance needs assessment.

Cash value life insurance is taxable in certain situations and non-taxable in others.

When taken as a lump sum, the death benefit isn’t taxable, however, if taken in installments like with an annuity, the interest earned on the remaining benefit is taxable.

When it comes to the cash value component of a life insurance policy, the earnings grow on a tax-deferred basis, so you might owe taxes when you are ready to withdraw the proceeds.

Overall, you can expect to owe taxes on your interest earnings or investment gains like any other financial product. If you are looking to mitigate potential taxes owed, make sure to only take out as much as you’ve put into the policy through premiums rather than taking out your earnings.

No. Term life policies do not have cash value.

Term policies are designed to be a more affordable life insurance option, and as such, these policies are the simplest form of life insurance; you pay a premium over a period of time and your beneficiaries receive a death benefit of cash when you pass away.

No. Not all life insurance policies have a cash value component.

Generally, only permanent life insurance like whole life policies and universal life policies include an investment feature (cash value).

Cash value life insurance can be a valuable investment if you are looking for long-term coverage with a built-in savings or investing account that accumulates over time. Since life insurance policies that build cash value need time to grow, they accrue interest on a tax-deferred basis to help speed up the accumulation process. Furthermore, cash value policies make an excellent life insurance plan for young adults because they have the luxury of time to grow its value.

Remember, the cash value in life insurance is intended to be used while you are alive and usually does not go to your beneficiaries. If you are primarily looking for a life insurance policy for the death benefit, consider term life insurance.

In most cases, the cash value of your life insurance policy does not get paid out to your beneficiaries. Furthermore, if there are unpaid loans taken from the cash value, the remaining balance will be deducted from the death benefit.

Yes. The cash value of your life insurance policy is considered a liquid asset because you can easily access it without a significant loss in value.

Once your cash value has grown, you can access it by making a withdrawal, taking out a loan, or surrendering your policy.

No. You cannot roll the cash value of your life insurance policy directly into an IRA. You can, however, make withdrawals and then contribute to your IRA, but the earnings may be subject to income tax.

If you are looking to make a tax-free exchange, consider rolling the cash value into an annuity.

Yes. You can easily take money out of the cash value of your life insurance policy as a tax-free withdrawal up to the amount you’ve paid in premiums; withdrawing from your earnings may be subject to income tax.

Yes. You can borrow against the cash value of your life insurance policy.

This is one of the most beneficial ways to use life insurance with cash value because the interest rates are typically better than a traditional loan and are much lower than a credit card. When borrowing from the cash value of your life insurance policy, you have 2 options to pay the loan back: you can pay it back with interest or have the amount deducted from the death benefit.

You can borrow from your permanent life insurance policy as soon as you’ve built up enough cash to fund your loan, however, this may take several years since you can’t take out a loan that exceeds the cash value of your policy.

Several factors influence how quickly your funds accumulate, such as the size of your premiums, your cash value life insurance rate, and the type of policy you have.

Yes. A life insurance policy can be surrendered for its cash value if it is a permanent policy, like whole life or universal life, which feature a cash value component.

Cash surrender value is the amount of money you will receive if your permanent life insurance policy is terminated. The cash surrender value is calculated by totaling the cash value you’ve built, minus any surrender fees or loan balances taken out against it.