cash value life insurance policy

Cash Value Life Insurance Overview

Cash value insurance has a investment feature. Cash value life insurance generally is more expensive than term life insurance. A portion of the premium is used to fund a savings or investment component that the policyholder can access by borrowing against it or by cashing in the policy. If a policyholder cashes in the policy, it is no longer in effect but the policyholder receives the cash surrender value.

Cash Value Life Insurance Guide

Read the policy carefully to make sure it meets your personal goals. Because your policy is a legal document, it’s important that you understand exactly what it provides. Ask for a point-by-point explanation for anything that is unclear and make sure the agent explains items you don’t understand

If your agent recommends a cash value policy, ask:

• Are the premiums within my budget?
• Can I commit to these premiums over the long term?

Cash value insurance provides protection for your entire life. Canceling a cash value policy after only a few years can be a costly way to get short-term insurance protection. If you don’t plan to keep the policy for the long-term, consider another kind of coverage such as term insurance.

If you’re considering a term policy, ask:

• How long can I keep this policy? If I want to renew it for a specific number of years, or until a certain age, what are the renewal terms?
• Will my premiums increase? If so, will increases start annually or after five or 10 years?
•  Can I convert to a cash value policy? Will I need a medical exam if and when I convert?
• If it has a return of premium benefit, ask: What would the policy cost without this benefit? Will all of the premiums be refunded?