How To Increase your wealth with life insurance

Life insurance, as everyone knows, protects your family and loved ones financially in the case of your death. However, did you know that certain life insurance policies contain a cash value that grows over time? And did you know that you may obtain the cash value of some of these plans while you’re still alive?

Permanent life insurance policies are in force for the duration of the insured’s life and accumulate cash value over time. Similar to retirement or college savings plans, these permanent policies feature a death benefit (or face amount) that is paid upon death and a cash value that builds tax-deferred over time.

How is cash value implemented?

Depending on the type of permanent policy you have, your cash value will accumulate differently over time. Keep in mind that there are limits on how much your cash value may grow relative to your death benefit, even though many permanent policies permit you to add additional funds to the policy to raise its cash value.

If an insurance policy is overfunded, it is considered an investment and loses its tax benefits. However, your insurer will monitor the policy to ensure that it adheres to the criteria.

In addition, many permanent policies allow you to access your cash value at any time and for any purpose, whether it’s for a down payment on a home, paying for your child’s education, or supplementing your retirement income. You may even be able to defer premium payments by using the cash value to continue paying your life insurance premiums and preserve your present life insurance coverage.

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What happens to the cash worth after passing?

When a death claim is made, the contract is terminated and the cash value ceases to grow. The cash value may or may not be paid in addition to the death benefit, depending on the type of insurance and death benefit. Consult your independent agent to determine how a particular permanent life insurance policy treats monetary worth after death.

Types of permanent life insurance

Permanent life insurance comes in four forms: whole life, universal life, variable life, and variable universal life. Consult with an independent agent to assist you to choose the best option.

Whole life insurance.

Whole life insurance is the simplest choice with almost no risk. The premiums for whole life insurance do not change. Also assured are the death benefit and cash value amounts. You will receive a chart with predetermined cash value numbers for each year of your policy when you purchase whole life insurance. If you wanted to withdraw from your cash value but did not know how much you could withdraw, you would use this chart to establish your cash value at that time in your contract.

Universal life insurance.

Universal life (UL) insurance policies combine a death payout with an interest-bearing savings account. Today, average interest rates for UL plans range between 3 and 4 percent and are routinely evaluated and altered as necessary.

A minimum interest rate is also specified in the contract. UL provides the flexibility of variable premiums, so you can pay less when your finances are tight and more when you have excess income.

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The policy has a guaranteed minimum death benefit, assuming your premium payments can support it, as well as a bigger cash value potential due to the policy’s interest accumulation and the option to increase your premiums.

Variable life insurance.

Variable life (VL) insurance has fixed premiums. However, these fixed premiums are assigned to several investment possibilities, much like mutual funds. Your liquidity is contingent on the performance of these investments.

This transfers the insurance company’s investment risks to you. There is the possibility of achieving a considerably higher cash value, but there is also the possibility of losing some or all of your cash value.

Variable universal life insurance.

Variable universal life (VUL) combines the investment component of variable life (VL) with the flexibility of variable premium payments in variable life (UL). Many investment alternatives with varied degrees of risk and profit are tax-free.

If your needs change after you purchase the policy, you can amend the coverage amount without having to enter into a new contract. If you don’t have enough money, you can use the cash value to cover the policy’s expenses.

You might increase your premiums or make a lump-sum payment to improve your cash worth. This insurance, like variable life, has a higher risk and potential benefit than whole life. It is, however, adjustable if your needs change over time.

Inquire with your independent Grange Life agent about appropriate term and permanent insurance.


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