Permanent life insurance provides protection throughout your lifetime as long as you continue to pay your premiums in full. Most permanent life insurance policies build cash value for you to use for expenses later in life like paying off a student loan, purchasing a car or receiving tax-free retirement income. Cash value is an attractive part of many whole life insurance plans.
Whole life policies are the simplest and have the strongest guarantees of any type of life insurance. Whole life policies allow for the accumulation of cash value on a tax-deferred basis, which can be used when you need it. Your cash value will build slowly and steadily, but as your cash value increases you’ll see it grow faster. It pays to be patient!
Universal life policies have flexible features that can be customized for you and your loved ones. The flexibility of universal live coverage allows for changes to the death benefit and the size and timing of the policy’s premium, to an extent. So as changes to your life take place so can your coverage. Your tax-deferred cash value account accumulates at least the guaranteed rate of interest, but may accumulate at a higher rate depending on current market rates. Meaning, you may receive more cash value than expected or you may get none at all. Consult with our professionals about overfunding to make sure your universal life policy has cash value.
Variable life is a permanent life insurance policy with a cash value account. Variable life insurance policies require a fixed annual premium for the life of the policy and may provide a minimum guaranteed death benefit. If the cash value account exceeds a certain amount, the death benefit will increase. Variable life policies usually allow for a wider selection of investment options, known as subaccounts, for you to choose from. Your choices can range from a fixed interest subaccount to a highly volatile international growth account. The downside of variable life is that the cash value can deplete rapidly if the investment decreases, so we rarely recommend it.
If you want a policy that can build cash value for you as well as build up some savings for later in life, talk to us about the right permanent life insurance plan for you!
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