As part of the coverage couple’s FAQ series, we’ll be answering the question “Do all life insurance policies have a cash value or personal loan feature?”
This is a common question and an important one. With so many different types of life insurance, there are similarities and overlap, as well as some unique benefits and features certain policies provide that others don’t. One of these features, as the question indicates, is a cash value component attached to the policy. Most often, this feature is reserved for one type of life insurance called whole life. As discussed in our other FAQ articles on thecoveragecouple.com, whole life is also referred to as guaranteed death benefit insurance — because you can’t outlive it. This type of policy is a smart foundation to your total coverage and investment strategy.
The cash value option works like a savings account wrapped in a life insurance account, which grows over time through your monthly contributions. The reason this is so powerful is that while you build cash over time, your total life insurance benefit will be there from day 1. This is one of the many reasons life insurance, and whole life specifically, is so much better than a savings account or hiding money in your mattress. In fact, the comparison between the 2 really doesn’t make sense, because a savings account is your money, along with a percentage of interest so small it’s confusing why they even offer it at all. Life insurance is the insurer’s money *and* your own!
Talking about interest, this is the most exciting part about the carriers we partner with. Unlike other carriers in the captive market (or even several in the open market) the interest yields on our policy offerings are second to none. Our options don’t just eclipse savings accounts literally by several hundred percent, but they’re far more aggressive than even competitors of the same variety. We’ve done a LOT of research, digging deep into policy summaries with magnifying glasses and meeting with chief underwriters and strategists at our carriers, and can confidently say if you’d like to have your cake and eat it too, whole life insurance is the vehicle to get there — and we have the very best options.
HOW DOES CASH VALUE WORK? The way cash value works is each of your monthly contributions goes toward not only maintaining your life insurance, but acts like a dedicated deposit into a guaranteed high-yield account. As this cash fund naturally grows over time, the aggressive interest accumulation happens faster and faster. Since these dividends are guaranteed with set minimum thresholds, your future cash value is predictable to the penny.
What many people do with this cash value fund is take some cashola out, tax-free, in either small or bulk amounts over time for vacations, home repairs, retirement parties, and so forth. The cash value is a versatile tool you can manage, deciding how much of it you’ll put back into your benefit or withdraw at your discretion. If you never reimburse the deducted money, that amount will simply be deducted from your death benefit. Alternatively, if you never touch your cash value component, upon death that account will either be provided to your beneficiaries above and beyond your total death benefit, or depending on your policy type and clauses, will disappear since it was never used by the insured while living.
Rest assured, you’ll be well aware of the functionality of your specific policy and benefits before, during, and after the life of your coverage, by partnering with The Coverage Couple.
WHAT’S BETTER THAN CASH VALUE? Another policy type, by far the best option we trust to protect our clients in life and death, is the IUL policy. This is an investment vehicle built on the chassis of life insurance, and has ALL of the advantages with NONE of the drawbacks. It has full Living Benefits, and an aggressive guaranteed cash fund that unlike whole life will NEVER have to be paid back. Indexed Universal Life (IULs) plans are the most beneficial hybrid of both instant estate AND legacy planning, plus a bonus investment component. That separate high-yield investment account is actively monitored through a patented management method that has drastically outperformed the stock market by wide margins for decades and counting! Contact us on our Scheduling Page for more information.
We commit to conducting deep investigative research for you, and would like for you to reserve time with us, without any cost or obligation. We’ll carefully listen, and then follow up with a proven, practical, custom proposal for your review. HERE is our official invitation to take part in The Coverage Couple Challenge, where EVERYONE WINS. Visit the Scheduling Page at thecoveragecouple.com to see how much we can save you on your existing coverage, or provide a financial risk assessment and needs analysis for your review if you’re unprotected and univested. We hope to hear from you soon, because your life is worth the investment! -Aaron & Sarah, The Coverage Couple