We are excited to share valuable insights, tips, and updates in the insurance industry. We are dedicated to providing the knowledge you need to make informed decisions about your insurance coverage.

 Cash Value and Life Insurance 

What is cash value life insurance?

Cash value life insurance is a type of permanent life insurance that also has an investment component. Over time, the policy accumulates value, you can borrow against or cash out to cover emergencies, or any type of expenses.

How does cash value life insurance work?

There are two components to permanent life insurance: the death benefit and the cash value.

The death benefit is considered the “face value” of your insurance policy. It’s the amount of insurance you purchased, which your beneficiaries stand to receive if you die.

The cash value side refers to the additional funds available to you while your policy is active. This portion of your policy accumulates tax-deferred interest. 

How does cash value accumulates?

As you make payments, one portion of the funds goes toward paying your policy, including administrative fees. The other is set aside in an investment account. Usually, more of your payment gets allocated to your insurance plan over time, since it becomes more expensive to insure you as you age. That means cash accumulates quickly during the early years of your policy, then slows down over time.

Does term life insurance have a cash value?

Term life insurance is less expensive than permanent insurance, but it has no cash value. When your policy ends, you don’t receive any money. Term insurance is a straightforward option that covers you during certain periods of your life, temporarily.