Cash Value Potential | Life Insurance Explained

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Meet Mathew. He already has a whole life insurance policy and is wondering how he can take advantage of the cash value component. Stick around to learn about strategies used to exploit the potential of life insurance cash value. Especially when your family relies on your income, life insurance is a necessary expense.
Life insurance policies enable a family to continue paying their financial obligations after the policyholder passes away. As well as a death benefit, cash-value life insurance policies accumulate cash over time. Policies with cash values can be used in a variety of ways. They can invest tax-free, pay premiums, and pass the benefit on to their children. The cash value of whole life, variable life, and universal life is built in. Term life insurance is not the same thing. While I have your attention, please hit that subscribe button and bell button to join our notification squad. When the death benefit is no longer needed, many permanent life policyholders do not take advantage of their cash value. Policyholders' beneficiaries receive the death benefit rather than the remaining cash value when they die. The policyholder may surrender the policy while still alive if he or she no longer needs the death benefit to pass to beneficiaries. They can also make smaller withdrawals or policy loans while still alive to access their cash value.
If you take cash out of a policy, the death benefit is also reduced. The policy owner can take a policy loan if he or she needs cash now but would like to keep the death benefit for the future and repay it over time. Let's look at some options with your life insurance policy cash value, including six strategies to make that cash value work for you. A significant amount of money could be left to your beneficiaries if you accumulate considerable cash value over the policy's lifetime.
The cash value of your policy can increase your death benefit. Most companies will accept your request if they don't want to lose your business. Using cash value can cover your premium payments once you have accumulated enough. You may be able to request this payout simply by asking your life insurance company. Saving around three thousand dollars per year is possible using this tactic.
It's also possible to refinance a policy with a high cash value. It's typical for life insurance companies to offer low-interest cash-value loans. Since you are essentially lending yourself money, you aren't obligated to pay it back. The risk of borrowing money and paying interest is that it will be deducted from the death benefit when you die. You are allowed to withdraw up to your entire cash value if your funds are low.
In some cases, withdrawals can chip away at your death benefit or even wipe it out entirely. In some policies, the death benefit is reduced by a dollar-for-dollar ratio. Sometimes, the benefit is reduced by more than what is withdrawn. Before tapping into cash value for retirement income, most financial advisors recommend waiting at least ten years.
Find out if this technique is right for you by speaking to your life insurance agent. You can surrender your policy and receive the cash value. However, many factors need to be considered. The death benefit of your life insurance policy is forfeited when you surrender. This means the beneficiaries will not receive anything when the policyholder dies. Your cash value could also be greatly reduced if you are charged a surrender fee. Additionally, you will be taxed on the surrendered cash. There could be even more taxes if you owe a loan balance.
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------- Contents of This Video -------
00:00 - INTRODUCTION
00:32 - CASH VALUE
01:01 – THROWING THE CASH VALUE
01:10 – SURRENDER THE CASH VALUE
01:30 - CASH VALUE LOAN
01:45 - INCREASING DEATH BENEFIT
02:15 – CASH VALUE WITHDRAWAL
03:05 – CASH VALUE TAXES

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