According to the latest research, 54 percent of Americans have life insurance. That’s actually down three percent from the previous year. And one in three families isn’t insured.
Many people don’t realize that you can capture cash value in life insurance while you’re still alive.
If utilized correctly, a life insurance policy can be used for several things. It’s not just an insurance policy that’s used after someone passes away.
If you want to know the ropes of cash value life insurance, read on.
How Does It Work?
Cash-value life insurance is permanent life insurance like a Paradigm MEC plan. The policyholder is covered their entire life. In most cases, you’ll pay more for it because of the cash value.
You can get a fixed premium plan or a plan that you can change the premium when needed.
Different Types of Cash Value Life Insurance
There are three different types of cash value life insurance plans. It’s an important choice, and you need to look each of them over carefully to make the best choice for your needs.
Universal Life Insurance
A universal life insurance plan can be complicated, but it’s more flexible than others. The premiums and death benefits can be changed. You can control more than the others.
When you’re in a good financial place, you can add more to it, and when things get tight, you can reduce your contribution.
You need to stay above a specific guideline, and you can’t go over your max contribution per year.
Whole Life Insurance
Whole life insurance is the most stringent. You decide on your monthly or yearly premium and cash value contribution, and that’s that.
It doesn’t change for the rest of your life. It does allow for inflation, but that’s out of your control.
Variable Life Insurance
Variable life insurance is the most complicated, and you don’t have a guaranteed return. You get to decide how and where our premium gets invested. You can choose stocks, bonds or spread them across the board.
It’s got a higher ceiling to get money back, but it also has higher fees.
What Are the Advantages?
You have many ways to access your funds. You can even do partial withdraws on most policies. You don’t get taxed on earnings until you make a withdrawal.
You can get unlimited withdrawals too. You can get a loan from yourself and not have to pay it back. You can use your cash value to pay your policy premium.
What Are the Disadvantages?
Surrenders or withdrawals can reduce the death benefit. Some policies restrict how many withdrawals you can make in a year. You might have a limited amount you can take out.
You’ll be charged interest on your cash loan, with a reduced death benefit until you pay the loan back in full.
The Cash Value in Life Insurance
Life insurance isn’t as cut and dry as it seems. But with a little knowledge and diligence, you can capture the cash value in life insurance and use it to your advantage. The upside cancels out the downside.
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