This is the value added to your account as you pay premiums. Initially as you pay into your policy your cash value will not make any gains. However after a few years this amount will add up and gains are exponential.
The average rate of interest is about 3%. Read Bank on Yourself and purchase a policy from a mutual company. Use the funds as you see fit.
Marc Crolius 877.894.4643
Whole life insurance policies also known as permanent insurance along with some other types of products such as universal life insurance build up a cash value after the insurance has been in force over an extended period of time. The cost per $1,000 of coverage is more expensive than term insurance and part of the premium is credited to the insureds cash value account.
Permanent life insurance, such as whole life and universal life are comprised of two parts. One part is the pure insurance, or death benefit. The other part is the cash or accumulation account. When you pay your premiums, part of your premium goes to pay for the death benefit, the internal cost of insurance. The remainder is credited to the cash or accumulation account(minus a small expense deduction). This account grows by additions from the insurance company in the form of interest or dividends. Universal life policies earn interest while whole life policies are paid dividends. This interest or dividend is dependent on the performance of the insurance company's investments and can change year to year.
Just like any other accumulation account, the larger the amount the faster it grows. So, at the beginning of the policy it grows rather slowly and, as the account receives more deposits it, grows more quickly. With life insurance, you won't receive a 1099 at the end of the year. The tax is deferred until you withdraw it. Then, the withdrawals are considered paid premiums first, until you've withdrawn as much as you've paid in. Only after that will withdrawals be taxed at your current income tax rate. This tax deferral is one of the great things about life insurance. You also have the ability to take a loan against the cash value in your life insurance, usually at a very low rate and this does not trigger income tax.
Lastly, for a long term need, permanent insurance is the least expensive way to purchase life insurance. Over time, the cash value will grow and will eventually be more than what you've paid making it essentially free, or better.
If this interests you, find a good agent you can trust and he/she will help you put together the right plan for you and your family.
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The average rate of interest is about 3%. Read Bank on Yourself and purchase a policy from a mutual company. Use the funds as you see fit.
Marc Crolius 877.894.4643
Keith Prim
Dallas, TX
214-435-0791
Just like any other accumulation account, the larger the amount the faster it grows. So, at the beginning of the policy it grows rather slowly and, as the account receives more deposits it, grows more quickly. With life insurance, you won't receive a 1099 at the end of the year. The tax is deferred until you withdraw it. Then, the withdrawals are considered paid premiums first, until you've withdrawn as much as you've paid in. Only after that will withdrawals be taxed at your current income tax rate. This tax deferral is one of the great things about life insurance. You also have the ability to take a loan against the cash value in your life insurance, usually at a very low rate and this does not trigger income tax.
Lastly, for a long term need, permanent insurance is the least expensive way to purchase life insurance. Over time, the cash value will grow and will eventually be more than what you've paid making it essentially free, or better.
If this interests you, find a good agent you can trust and he/she will help you put together the right plan for you and your family.