Most cash value life insurance policies are designed to be permanent; you can keep them your whole life if it makes sense. You can keep the policy in force until you die, and your beneficiaries are paid the death benefit which is typically tax free.
Money accumulates inside the contract and earns tax deferred interest. You can borrow money against the accumulated cash value. Or you can cancel the policy are receive the cash value. There may be tax implications on policy cancellations.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The reason people buy life insurance is to provide a benefit to someone that they love. For many these reasons last a lifetime. Those people buy permanent insurance. While there are a variety of forms used a permanent policy is designed to provide a level death benefit in exchange for a level premium. Because the term of the policy is indefinite the company must charge more than for a policy providing coverage for a distinct period of time. The company then develops “reserves” to meet their future guarantees. These reserves are published in the policy as “cash value.” This means that if you have such a policy and wish to receive the stated cash value, the company will exchange the cash value for a release from their promise to pay a death claim.
.JPG){kind=avatar}
Money accumulates inside the contract and earns tax deferred interest. You can borrow money against the accumulated cash value. Or you can cancel the policy are receive the cash value. There may be tax implications on policy cancellations.