A cash value life insurance policy is comparable to a retirement savings account in that investments can earn interest without having to pay taxes.
The cash value of the policy, which can be withdrawn or borrowed against in the future, receives a portion of each premium payment.
When the insured is young, a life insurance policy’s cash value increases quickly.
However, due to the higher risks associated with age, the insured’s cash value grows more slowly as they get older because more of the premium is required to cover the cost of insurance.
The insured can borrow against their policy’s cash value or withdraw funds in a partial cash surrender to access the cash value. Your policy’s final death benefit will be reduced if you surrender.
Instead of paying out of pocket, you can also use the cash value to cover your monthly premium payments. Alternately, you can surrender the entire policy for the full cash value, less any surrender fees.
However, the policy will be terminated, and your beneficiaries will no longer have access to the death benefit.
