When you have whole life insurance it is designed so that you are building more and more cash in it each year. When a whole-life policy gets to maturity (called the endowment year) you are actually self insured. Your cash value is the same as your death benefit at that point.
You can use the cash value while you are living by giving yourself low-interest loans against the cash value of your policy. You are not required to pay these loans back if you don't want to since the cash in your policy is what guarantees the loans.
The cash value is not in addition to your death benefit, it actually is part of the death benefit on whole-life policies. The remainder (cash value subtracted from the death benefit) is the remaining insured amount.
Agent, Rural Mutual Insurance Co., Union Grove, WI
Cash value on a life insurance policy is the amount that the policy would be worth if it were cancelled at the point that the cash value was determined. Every carrier and policy is different. The cash value may still be subject to some fees or other charges when the policy is terminated. To know all of the coverages and exclusions afforded under the policy you should read it completely or contact your local agent to have them go over the policy with you.
Permanent forms of cash value life can accumulate cash via premiums and credited earnings from interest rates, indices or equity and bond instruments in separate sub accounts offerings. Permanent forms of cash value life insurance are participating whole life, current assumption universal life, indexed universal life and variable universal life.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A permanent life insurance policy has two elements, the cost of insurance in a given year, and an accumulation fund to reduce the impact of increased premiums for insurance as you get older. The company will give you the accumulated amount as cash value anytime you are willing to stop holding them to their promise to pay the death benefit.
That is a great question! Simply put, there are two values to your whole life policy - the face value, or death benefit, which is what the policy would pay should you pass ( minus fees or loans), and the cash value. The cash value is the amount of money that accumulates within the policy as it grows. This is the amount that you can borrow from, or the amount ( minus loans or fees) that the company would pay out to you should you surrender the policy. There is no cash value in a term life policy. I hope that helps - thanks for asking!
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A permanent life insurance policy is where you will find cash value. In your policy it is often called a non-forfeiture value. The permanent policy is designed to offer a death benefit throughout life for a set premium. While not all policies guarantee the premium the policy premium includes money that is accumulating to offset the death benefit as the age of the insured increases. At any time that there is cash value in the policy the company is willing to give you that cash value in exchange for taking away their responsibility to pay the death claim.
That is a great question! One of the best things about whole life insurance is that as you pay into the policy, the cash begins to pile up in it, and is there in the event that you need to borrow from it. It is different from the surrender value, which is the amount that you would receive were you to surrender the policy. I hope that helps, thanks for asking!
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You can use the cash value while you are living by giving yourself low-interest loans against the cash value of your policy. You are not required to pay these loans back if you don't want to since the cash in your policy is what guarantees the loans.
The cash value is not in addition to your death benefit, it actually is part of the death benefit on whole-life policies. The remainder (cash value subtracted from the death benefit) is the remaining insured amount.