Understanding Whole Life Insurance: Cash Value vs. Death Benefit Explained

In this video, Tim and Olivia break down the intricate details of specially designed whole life insurance policies, shedding light on key aspects of living benefits and the death benefit. They clarify how these elements are intertwined in your insurance policy and what happens if there's a policy loan against your cash value at the time of your passing. Discover why you don't receive both the death benefit and cash value, and why it's essential to understand this concept when planning for your financial future.
Let us know what you think in the comments.

#Tier1Capital #WholeLifeInsurance #InfiniteBankingConcept #DeathBenefit #PolicyLoan

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**Tier 1 Capital makes content available as a service to its customers and other visitors, to be used for informational purposes only. While our best intentions are to provide accurate and timely information, you should always consult with retirement, tax, and legal professionals prior to taking any action.
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[thefinancialcowboy]

So many things left out. Cuz you actually do get both cash value and death benefit. Yes the stated death benefit is what you get but if it's level then calculated to where more of the premium goes to the COI at the beginning of the policy and less to the CV. Meaning that if it they pay only the policy minimum or would build no cash value and the COI would eventually cause the policy to expire. That's why eventually the DB will start increasing to avoid the tax. No CV. None of that happens.

With increasing death benefits, it withs the same but the amount of premiums that go to COI and CV remains the same throughout the policy. When you die. Beneficiary gets the stated benefit, which will be equal to the initial death benefit plus the CV. CV is already factored in to the death benefit. So yes, you do get the cash value and the death benefit paid to the beneficiary when you die.

Now legally, they have to say you do but get both because then the carrier would have to pay out the listed death benefit plus the amount of cash value that's in the policy.

[TierCapital]

It depends, meaning that if cash surrender value is less than total premiums paid there should be no tax. If cash surrender is greater then cumulative premiums paid, there should be tax on gain over basis, let us know if you want more clarity

[jjsoccer]

You two always make it so simple to learn the basics about Whole Life Insurance and how it works. Well done again! 😊👌👍

[iamokay]

What will result in a larger sum of wealth in the long run? Buying whole life insurance or buying term for the same amount and invest the difference?

[rikallen]

If we cash the policy out early (I am still alive). Are there any tax implications? Is the payout tax free?

[Jonavideos]

What happens of the cash value exceeds the death benefit?

[michaelderosa]

Does the death benifit increase over time if your over funding the policy. So my death benefit is currently 100k now but i am over funding the policy will continue to do this increase the death benefit years down the road?

[danielkelley]

If I take a withdrawal from the cash value, does the death benefit decrease or does it stay the same?

[ericchen]

If the goal is to use whole life insurance (via ILIT) to pass wealth to beneficiaries with least estate tax, then it seems the cash value element in insurance is useless for that purpose, right? Why should I care about maximizing the cash value with products like IUL if the beneficiaries are not going to get that but only the death benefit portion?

[gregbell]

Please discuss the cost differences of $150, 000 while life and 150, 000 term policy.

[pgppe]

Run people run from whole life insurance. Age of maturity 100, or 125????

[MineshBaxiYT]

simple point- buy term life insurance, not Trash Value

[samsciascia]

Net Amount At Risk + Cash Value = Net Death Benefit

[smokenojoke]

Seems like there’s more downside to whole life. I don’t get to keep my cash value (which is my money) and if I pass away before paying it off they deduct it from my beneficiary policy. He used the wrong home analogy in my opinion. If I pass away and my family gets my home they don’t start with zero equity.

[happywong]

Oh no, I always thought we get both death benefit & cash value at the time of death.

[jcrockett]

Death benefit is the value of the house... cash value is the equity in the house.

[markf.]

Whole life is touted as great life insurance AND AND AND a great savings plan. But when you die, you are left with ONLY ONLY ONLY the death benefit.
Comparing a whole life policy to a house is ridiculous. I don't have to die to reclaim the equity in my house. However, buying a whole life policy is like buying a house and then having to pay rent to live in it. The "living" benefits of a whole life policy involve BORROWING against your own cash value and paying interest to the insurance company. WOW, what a benefit! Whole life insurance assumes that, of course, people need life insurance well into their 60s, 70s, 80s, and 90s, and should be willing to pay for that as well. The truth is that they don't, and that may be why about 80% of those that buy whole life end up surrendering their policies early, with a huge financial loss. At least they cut their losses early as well.

[chrismulcahy]

Heres a great example of whole life from the horses mouth. Well known company in the industry, long time on you tube. Low views and all the comments are against the model. Glad there are two hosts but even though one has a heart of a teacher and the other assertively mansplains, it ain’t helping. I’ll stick with those Tennessee “gurus”.