Whole life insurance and some universal life policies have a beneficial feature that is called “cash value,” or “cash surrender value.” Cash value increases over time as the insurance premiums are paid. If you are just starting out or if you are concerned about wealth management, an agent of Smart Way Insurance Agency in Sandy, UT can help with recommendations about the appropriate life insurance for your particular circumstances.
Here are some potential benefits that are incorporated in certain life insurance policies that build up cash value:
- Cash Withdrawals/Borrowing: Some policies have a provision that allows limited amounts of cash withdrawals or borrowing against the cash value after the payments of a certain number of insurance premiums. These withdrawals/loans are usually non-taxable up to the number of premiums that have been paid.
- Cash Surrender Value: This is the amount that an insurance company will pay to the insured person or the owner of an insurance annuity if the insurance policy is canceled prior to the maturity of the policy.
- Cash Value as a Long-Term Investment: If a person starts paying insurance premiums at a young enough age, there is the ability for the cash value to exceed all the premiums paid for the insurance. On average, it takes between 12 to 15 years for whole life policies to reach this status. For universal life, the average time it takes is 15 to 20 years. This is a wonderful feature because at a certain age the insured has the ability to get all their money back that they invested in premiums and also had the benefit of insurance coverage for all of those years.
Insurance policies have different features regarding cash value. Talk to an insurance agent at Smart Way Insurance Agency, serving Sandy, UT and the surrounding area, to learn more about the investment characteristics and the cash value benefits for life insurance and to get a quote for the coverage you need.