We all agree that life insurance can turn out to be an important financial tool, especially when you have a family that depends on you. In the event of your untimely demise, a participating whole life insurance will ensure your family’s financial needs are met. From the monthly mortgage to grocery bills to your child’s college education, everything will be catered for.
Even though income replacement is the primary purpose of life insurance, there are also other remarkable reasons for taking this approach, such as building a nest egg for retirement.Also regarded to as permanent life insurance; cash-value life insurance policies offer both a death benefit and a cash-value accumulation during the policyholder’s lifetime.
With cash-value life insurance policies, you can use the cash value in a wide range of ways including: a tax-sheltered investment, a means to pay policy premiums later in life, and a benefit they can pass on to their heirs.
Unfortunately, a good number of policyholders fail to make the most of the cash value in their permanent life policies. This is especially if they no longer need the death benefit. In the event that policyholder dies, their beneficiaries receive the death benefit, in lieu of any remaining cash value.
But what if there is no need to pass the death benefit on to beneficiaries any longer? In this case, the policyholder can access the accumulated cash value while still alive. This is either by surrendering the policy entirely or by making smaller withdrawals or policy loans.
Keep in mind permanent life insurance offers both a death benefit and a cash-value amount but on death, beneficiaries only receive the death benefit. Any remaining cash value goes back to the insurance company.
If you have accumulated a sizable cash value over the life of your permanent life insurance policy and have no intention of using these funds yourself, you may choose to leave a large death benefit to your beneficiaries. You simply call your life insurance agency and say you’re interested in making a trade, and you’re good to go.