Pros & Cons of Cash Value Life Insurance
Cash value life insurance is a form of life insurance where some of the premium is saved into an account that can be used by the buyer. This type of life insurance has both advantages and disadvantages to consider.
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Premiums
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One disadvantage of cash value life insurance is that the premiums are significantly higher than term life insurance. These higher premiums are used to pay for the cost of the insurance as well as being used to fund the cash value part of the policy.
Stability
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Cash value life insurance has the advantage of providing a stable amount of financial protection until the death of the insured individual. One of the ways that the cash value can be used is to pay for premiums as the policy ages. This means that the insured will no longer have to make insurance premium payments to maintain coverage.
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Cash Savings
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The cash savings that build up in a cash value life insurance policy can be used in many ways. In addition to being used to pay the premiums, the insured individual can borrow the money and repay the loan at a generally low interest rate. The cash value can also simply be withdrawn from the policy, but this will reduce the death benefit.
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References
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