How to Capture Cash Value in Life Insurance

Life insurance is a must have especially when you have a family that depends on your income. Death is uncertain that is you don’t know if it’s today, tomorrow, or 50 years from now. A life insurance is an assurance that even after your demise, you will leave your family and loved ones in safer side.

This plan will ensure your family financial needs are covered from the monthly mortgage to grocery bills to your kids’ education. However, income replacement is the primary goal of a life insurance. Here are ways to capture cash value in life insurance.

Don’t Throw Away Your Cash

Many policyholders do not make the most of the cash value in their permanent life values especially if they no longer need this benefit. Once the insurance holder passes on, their loved ones receive the death benefit in account of any remaining cash value.

If the insurance holder finds that it’s not necessary to pass the death benefit on to beneficiaries any longer, the policyholder can access the accumulated cash value while still alive. That is either by surrendering the policy in whole or by making smaller withdrawals from time to time.

Take Out A Loan

If the policyholder no longer find the essence of death benefit, you may choose to take out a loan against your policy that is if you have built a sizable cash value. Different life insurance companies often offer these cash value loans at interest rates lower than the other traditional bank loan. And that you should always factor this in when comparing insurance quotes.

You are not obligated to pay the loan since you are definitely borrowing from your own money. However, it’s important you note that any loan you borrow, plus the interest will be deducted from the death benefit when you die.

Bottom Line

Don’t invest in a life insurance policy without deciding how you will use it in the long run. Your cash value can permanently accumulate whereas you could be having other places to invest on. It’s therefore important to ensure the cash value is drained so it doesn’t end up with the carrier after your demise.