How Cash Value Works

Cash Value Life Insurance – Father and son washing dishes together

Even the most financially savvy people out there know this one universal truth: Saving money isn’t easy. It takes careful budgeting and a serious commitment to reaching your goals. Even when you’re doing your best, unexpected expenses can put a dent in your plan.

Here’s some news that may be surprising: A whole life insurance policy can give you more financial options.

You read that right. Whole life insurance doesn’t just protect your family. It also can help protect your financial well-being when there’s a cash value component involved.

So what exactly is cash value?

It’s a feature of whole life insurance. The cash value of your policy is the accumulated amount of money that Gerber Life sets aside each time you pay your premium. That means that the longer you hold your policy, the longer the cash value builds. Best of all, the cash value of your policy as well as the policy never expires.

How can cash value be used?

  1. You can borrow against the cash value of your policy. Let’s say that your car breaks down, or your child needs some extra cash for college costs, or maybe you’re between jobs and need some extra cash flow. No matter the financial emergency, you can borrow money against your policy’s cash value. It’s a lot like taking out a loan, but it’s more like borrowing from yourself rather than from another financial institution. However, the loan amount will reduce the policy’s coverage amount until the loan is paid back. (Policy loan interest is 8%. Loans may impact cash value and death benefit.)
  2. If you ever decide to turn in your policy, you would receive the accumulated cash value that has been building over time, less any outstanding debt against the policy.

When shopping for a life insurance policy, you’ll first want to figure out how much coverage you’ll need to ensure that your family has enough protection. Gerber Life Whole Life insurance offers coverage amounts from $50,000 to $300,000* with relatively affordable monthly premium rates, so you can find a policy that fits your budget.

Keep in mind that your policy’s cash value continues to accumulate as long as premiums are paid. The monthly premium amount you pay when your Gerber Life Whole Life coverage starts automatically locks in, so it’s the same amount you’ll pay throughout the life of your policy. Since premium rates are largely based on your age when you apply, the sooner buy a policy, the lower your lifetime premium rate.

If you have any questions about how the cash value component of a whole life policy works, we’re here to help. Call us at 1-800-425-7542 today to learn more or to apply now for Gerber Whole Life insurance.

"Your policy’s cash value continues to accumulate as long as premiums are paid."

*Higher coverage amounts available up to $1 million for those who qualify.

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