Cash Value Life Insurance

Insurance is hardly a new concept, and yet few people understand all their options when it comes to life insurance policies. There is no one-size-fits-all solution to life insurance, so it’s important to explore all your options to find the right insurance plan for your needs. At Elevate Financial & Insurance Services, LLC, we can help you to explore all possibilities for life insurance, including less commonly known plans like cash value life insurance for business or personal needs.

What Is a Cash Value Life Insurance Policy?

Cash value life insurance is a finance strategy that utilizes your permanent life insurance cash value as a means of growing your assets. This means you can take loans against the policy and grow the cash flow through dividends.

There are three examples of permanent insurance. Whole life, Universal Life and Variable Universal Life. If you have a whole life insurance policy in place, you can lend yourself money, using the cash value of your policy as collateral. This may help you avoid paying loan interest to a bank and gives you rapid access to extra funds when needed, in a potential tax efficient way. You may be able to also use it as a lending strategy with a mid-tier bank, for lending purposes. Of course, not every insurance company allows for flexible product design, so it’s important to find an insurer that fits your needs if you’re interested in utilizing a cash value life insurance policy.

The Benefits of Cash Value Life Insurance

If you’ve never heard of cash value life insurance, you might be wondering why some people opt for this type of insurance coverage. Here are just some of the benefits of using cash value life insurance:

Borrow money against your insurance policy without paying interest to a third-party lender.
Grow the cash value of the policy more quickly with a participating life insurance policy that offers benefits.
Transfer wealth across generations with a participating life insurance plan.
Continue to accumulate interest on the entire cash value of the plan, even if you’ve borrowed against it.
Access cash values or dividends tax free
Structure plan to meet insureds needs, whether it be for personal or business purposes
Guaranteed growth, tax deferred, basis protected, liquid, non-qualified, flexible
Positioned as a down market asset and non-correlated

Of course, as with any asset, this structure has its own drawbacks as well. It’s not a good option for those looking to liquidate in a year. It’s also not an option if you can’t get approved by an insurance company, such as those with serious pre-existing health conditions.

If you’re not certain whether a cash value life insurance plan is right for you, contact Elevate Financial & Insurance Services, LLC, today. Our advisors can discuss the pros and cons of this type of life insurance with you and help you to determine the best fit for your finances, your family, and your future.

Frequently Asked Questions

We recognize that cash value life insurance is not a widely understood form of life insurance. We’ve put together a list of the most asked questions about this type of insurance below and provided the answers you need to better understand how it can fit within your financial plan.

To take advantage of cash value life insurance, you need to first have a well-designed cash value life insurance plan. Typically, permanent insurance combines two sub-components: investment and cash accumulation. The investment portion of permanent life insurance protects your beneficiaries if you pass away, while the cash accumulation component generates cash value for as long as you hold the policy. Once you’ve accumulated a meaningful amount, you can borrow against that value and start enjoying the benefits of leveraging your whole life insurance cash value.

As we mentioned, the first thing you’ll need is to design a plan to your needs and apply for life insurance to a specific carrier. You can work with one of our advisors to choose the best product for your needs and create a plan that will work best for your intended purposes. It’s best if you are already financially sound and have a steady income stream, as the premiums can range from low cost to costly contingent on your desires. You should plan to put about 6% of your income into your cash value policy. While this might sound like a large amount, remember that this is an investment for your future as well as the future of your loved ones.

Learn How to Protect Your Family’s Future

Want to learn more about cash value life insurance and how it can protect your family and even grow multi-generational wealth? Contact Elevate Financial & Insurance Services, LLC, to schedule a consultation.

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