Having a lifetime of financial protection: That’s certainly the goal when deciding to buy whole life insurance, since you are guaranteed coverage from the day you buy the policy through the rest of your life, as long as the premiums are paid – which adds up to greater peace of mind. However, whole life insurance has another benefit that’s another big plus: cash value.
Each time that you make a premium payment for your whole life insurance policy, the insurance company sets a small portion of it aside. That reservoir of cash, which grows over time, is known as the policy’s “accumulated cash value.” The longer you hold the policy, the more the dollars grow.
The accumulated cash value of a whole life policy could become a security blanket during life’s ups and downs. For example, a policy owner could turn in the policy for its available cash value, or borrow against the cash value and still keep the policy in force, or temporarily use the cash value to pay the policy’s monthly premiums. To take a policy loan, all premiums need to be paid and interest rates will apply, set by the insurance company.
How much cash value a whole life insurance policy can build depends on such factors as your age, how long you’ve owned the policy, the policy’s coverage amount (death benefit), and whether there’s any outstanding debt from loans against the policy.
A policy owner who takes a loan against the available cash value may choose to pay back the loan with interest, or to have the amount owed deducted from the death benefit at the time of payout, or to surrender the policy and have the amount owed deducted from the available cash value.
Cash value will be greater in the later years of a policy than in the early years, since the cash value accumulates over time, but the bottom line is that ready cash can be available should a need arise.
Policy owners can access the available cash value of their whole life insurance policy, such as the Gerber Life Whole Life Plan, at virtually any time. That’s something you can count on – just as you can count on the cash value for a rainy day.