Sentences with phrase «eventual cash value of the policy»

Not exact matches

Holding the policy in an irrevocable trust allows the insured to keep the policy out of his or her taxable estate, possibly reducing eventual estate tax liability, though they give up rights to access the cash value prior to death.

However, the policy does not provide any returns beyond the death benefit (the amount of insurance purchased); the policy has no additional cash value, unlike permanent life insurance policies, which have a savings component, increasing the value of the policy and its eventual payout.

Since you pay more in premiums in the early years of the policy than you would in a term policy, the excess premium goes into the cash value of the policy, which represents the reserves the insurance company sets aside to cover the eventual death benefit.

While the insured person is alive, life insurance policies continue to take in money against the eventual payout, building value towards the eventual time when the cash value of the policy is due.