How does the “Cash Value” work on Permanent Life Insurance Policies?

Getting life insurance is one of the most important things that you can do for yourself and your family. It’s one of the best ways that you can protect your loved ones, regardless of what happens to you. Because life insurance is so important, it’s vital that you make the best decision to give your family the best insurance protection that they need. At Longevity Brokers, we are proud to sell several different insurance products, not just life insurance. We are also happy to provide auto insurance as well as home owner’s insurance.

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We know that purchasing a life insurance policy can be a long and confusing process. There are dozens of different types and components within each of the policies. One of the common questions that we get revolves around the “cash value” aspect of life insurance policies. We are here to clear up any confusion that you may have and to answer any questions.

Cash Value Inside of Life Insurance

The cash value component of life insurance isn’t available with every type of policy, it is only a part of permanent life insurance policies, not with term life insurance plans. To put it simply, cash value inside of a plan continues to grow the longer that you pay premiums on your insurance plan. Just about every form of whole life insurance has a cash value component.
Once your plan has accumulated enough cash, you can use it to do several different things. You can use that cash to pay the premiums for the policy, take out a loan against the cash that will give you a lower interest rate, invest the cash, or use it to supplement your retirement income. As you can see, there are several advantages to having a policy with the cash value building up inside of it.

Whole Life Versus Term Insurance

The two main types of life insurance are whole life insurance and term life insurance, they each have distinct characteristics that you should be aware of when purchasing a life insurance plan. The first is that any permanent insurance policy that has cash value is going to be more expensive than a term insurance policy. If you’re looking for the cheapest insurance coverage, a term policy is going to be a better choice.
Another factor to understand, is that term insurance plans have an expiration date on them. When you purchase the policy, it’s only effective for a predetermined amount of time. They are normally sold in 10,20, or 30-year terms that you can buy to suit your needs. Once that time is up, you’ll have to reapply for insurance coverage once again. If you want the security of never losing life insurance coverage, a whole life policy is the best option.
Because each of the plans has their own benefits, you’ll have to look at all of your different options to give your family the best life insurance policy that they need. Regardless of which type that you choose, it’s vital that your family has the insurance that they deserve.

The Importance of Life Insurance

Life insurance is one of the most important investments that you’ll ever make. If you purchase a whole life policy, it’s the only investment that you can be 100% that you’ll get a return on. There is no way to avoid death, which means that you should plan for the inevitable.
If you were to pass away tomorrow, your loved ones would be lefts with all of your debts and final expenses, which can make an already difficult situation a lot more stressful. That’s where life insurance comes in, it gives your family the resources that they need to get through the emotional period of losing a loved one.

How much Life Insurance do you need?

Aside from picking the best type of life insurance policy, the next biggest decision is to calculate how much insurance coverage you’ll need to buy. There are several factors that you’ll need to account for when looking at your life insurance needs.
The first one is your debt. The primary goal of your plan is to give your loved ones the money that they need to pay off all of your debt and final expenses, which can easily add up to thousands and thousands of dollars. Make sure that your insurance plan is sufficient to cover all of these costs.
The next factor to account for is your annual salary. The secondary goal of life insurance is to replace your paycheck if anything tragic were to happen to you. The more people that rely on your income, the large policy that you’ll need. If you’re one of the primary income earners in your household, your loved ones will suffer financially if you passed away.


Because life insurance is such an important investment, it’s vital that you make the best decision. Each type of policy has different benefits that you can take advantage of, one of the advantages is cash value accumulation. It’s vital to understand everything that you can do with the value inside of the plan.
If you have any questions about life insurance, whole life plans, or about the cash value, please contact one of our agents today. At Longevity Brokers, we are not only proud to provide quality insurance products to our customers, but we also work to help our customers make the best decisions when purchasing insurance policies. Please call us at (270)209-4598 or use our contact page.

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