3 Frequently Asked Questions About Purchasing Cash Value Life Insurance |
Posted: January 5, 2022 |
Life insurance is a vital part of any financial plan, but knowing which type of policy is right for you can be confusing. Cash-value life insurance policies are a popular option, but they come with some important considerations that you should take into account before purchasing one. What does cash value mean?In terms of an insurance policy, the cash value is the portion of the policy that accumulates over time. This money can be used to pay premiums, cover policy costs, or be withdrawn as cash. What are the benefits of a cash-value life insurance policy?Cash-value life insurance policies offer many potential benefits, including:
These benefits only come when the policy is in force, so paying premiums up to date is essential. Cash Value Policies - Three Frequently Asked Questions1. How much will the premiums cost? Cash-value life insurance policies typically have higher premiums than term life insurance policies, with premiums that can be more expensive as the policy matures. However, the higher premium costs are offset by the fact that you can borrow money from your cash value without incurring additional fees or penalties. 2. Is my money locked away? Cash-value life insurances are a form of insurance that cannot be touched until the insured passes away. However, there are ways to access your money without exposing yourself to legal or tax risks. You can borrow against the policy's cash value and pay it back with interest over time. As an alternative, you can withdraw regular amounts from the cash value while keeping your account in place so that it can earn a return. If you withdraw money, the insurance company will reduce the cash value over time, and your death benefit may be reduced as well. 3. What is it backed by? Cash-value life insurance policies are backed by an insurance company's promise to make good on their commitment to providing life-long coverage in exchange for premiums you pay. Failure to pay these premiums could result in the policy being canceled, so it's important to be sure you can afford the payments. Cash-value life insurance policies offer several benefits that make them a popular choice for many people. However, by understanding the pros and cons of these policies, you can make an informed decision about whether or not they are right for you.
|
|||||||||||||||||||||||||||||||||||||||||||
|