Applied To Permanent Policies
Cash values are one of the attractive incentives to buying permanent life insurance. Although the main reason you buy life insurance is to provide a death benefit for loved ones there are policies that provide cash that is available to you as long as you maintain them in force.
Term life insurance is the least expensive type of life insurance available. You put out more money in premiums for whole life, universal life, variable universal life and variable life insurance than you would for term insurance. These policies accumulate cash that you can put your hands on while you are still living. Term life insurance only pays when you die.
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Life Insurance Cash Values
Advantages Of Cash Value Life Insurance
- They accumulate free of Federal Income Taxes while they accumulate.
- They are guaranteed and they are increased by paid up additions and dividends if there is a dividend earned. Dividends are not guaranteed.
- Even though you pay more for this type of life insurance you may consider the cash available after a few years sufficient to offset the additional cost of permanent policies.
- If you should need cash in the future you can obtain it in the form of a loan or you may surrender your policy. Loans are easier to obtain than commercial loans…and you repay at your convenience but with a nominal interest rate.
- You can use your available cash to pay off your mortgage. If your policy is large enough at some point the cash accumulated becomes sufficient to pay off an outstanding mortgage you may surrender your policy and pay off the balance owed.
- You may accumulate funds in these policies to add to your retirement fund.
Disadvantages Of Cash Value Insurance
- Premiums are much higher than term insurance. Because of this if you choose permanent insurance you may be unable to afford the amount of insurance you need to protect your family.
- If a loan is taken from your cash values the death benefit is reduced by the amount owed.
- An outstanding loan reduces available cash at surrender of the policy.
The best available permanent life insurance policies that I know of are issued by Northwestern Mutual Life Insurance Company.
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