What Does Liquidity Refer To In A Life Insurance Policy?
4330 POINTSview profileJerry Vanderzanden, CLU, ChFCCo-Founder, Coastal Financial Partners Group, CaliforniaLiquidity in life insurance is generally the cash surrender value of the policy. If you "liquidate" your life insurance policy, the insurance company will give you the cash surrender value of the policy. In the first few years, the policy may have no value if canceled but, over time, the cash surrender value can grow.Answered on April 22, 2013flag this answer.JPG)
63333 POINTSview profilePeggy MaceMost of the U.S.In life insurance, liquidity generally refers to the fact that life insurance pays quickly and pays in cash, so that the beneficiary has the ability to quickly and easily pay expenses surrounding the death of the insured. Life insurance with a person named as a beneficiary does not need to go through probate, making it accessible to use as the beneficiary sees fit.Answered on June 6, 2013flag this answer
5877 POINTSview profileStan Cox IIInsurance Adviser - Broker, SC Insurance Services, Oahu, HawaiiWith permanent life insurance there is a cash value accumulation component. Not so with Term insurance, so in the case of Term insurance liquidity does not apply. Within the category of permanent life insurance, Whole Life generally has the best cash value component. Once your policy has developed cash value, and that generally takes a few years due to the cost of providing the insurance component of the policy, (all the risk is on the insurance company), then that cash value becomes a liquid asset that you have access to. Ask your insurance agent to explain what the options are associated with your policy.Answered on August 9, 2015flag this answer
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