The accidental death or double indemnity rider pays the beneficiaries twice the face
value of a life insurance policy in the event the insured dies as the result of an accident.
There are important things you need to know about the impact of borrowing against the cash
value of your life insurance policy in order to avoid jeopardizing the welfare of your beneficiaries.
Along would come these less than reputable business people (we'll call them pigs), who would be willing to pay you half of
the value of your life insurance policy in exchange for ownership of the policy.
Not exact matches
The same follows for annuities and the cash
value in your
life insurance policy, said David E. Hultstrom, co-founder
of Financial Architects
in Woodstock, Georgia.
Your
life insurance net cash
value is the «actual» surrender
value of the
policy, and you will typically find it listed separately
in your
life insurance statements.
A
life insurance policy loan is just a loan from the insurer
in which the cash
value of your
policy is used as collateral.
If you work for a company that does not offer a qualified retirement plan (or does not offer a
life insurance option
in an existing plan) or if you have already contributed the maximum amount to your qualified retirement plan, a cash
value insurance policy can offer some
of the tax benefits
of a qualified retirement plan.
It trades some
of the
value growth benefits
of a whole
life insurance policy in exchange for more flexible payment plans and a lower price.
A
policy that pays dividends is able to increase
in value above and beyond the interest that other types
of permanent
life insurance policies accumulate.
Many types
of permanent
life insurance policies increase
in value over time based on interest rates.
In later
life stages, permanent
life insurance may offer, depending on the type
of policy, the opportunity to accumulate cash
value on a tax - deferred accrual basis, money that can be used for diverse needs.
Had the individual purchased permanent
life insurance, he or she could have access to a potentially significant source
of supplemental retirement income
in the future (depending on the
policy type), while preserving the death benefit
in perpetuity (note, however, that the death benefit and cash
value of a
policy is reduced
in the event
of a loan or partial surrender, and the chance
of lapsing the
policy increases).
Since the growth
of your
policy's cash
value is tax - deferred, variable
life insurance might be a good consideration if you've maxed out your retirement account contributions, have a sizable portfolio
of more liquid assets (such as
in your brokerage and savings accounts), and are looking for an additional investment vehicle that also offers coverage to your dependents should anything happen to you.
Variable
life insurance is also similar to whole
life insurance but, instead
of having a guaranteed rate
of growth, the cash
value of the
policy can be invested
in sub-accounts offered by the insurer.
If you're considering permanent
life insurance, but are wary
of the complexity
of the
policy and not interested
in the cash
value or investment benefits, guaranteed universal
life insurance is a less expensive way to purchase nearly - lifelong coverage.
However, given the complexity
of the
policy, the additional costs correlated with permanent
life insurance policies, and the potential to lose the entirety
of the account's cash
value, it's not recommended if your primary intent is to provide financial coverage
in the case
of your death.
A study published
in the International Journal
of Obesity showed that nearly half
of people diagnosed as obese using BMI measurements are actually healthy, leading some to believe that there is no
value of a BMI measurement at all, except for
life insurance policies to increase premiums.
In this video I have explained the application of expected value in Term life insurance polici
In this video I have explained the application
of expected
value in Term life insurance polici
in Term
life insurance policies
In a nutshell, while most whole
life insurance is fixated on maximizing the death benefit
of a
policy and just allowing cash
values to grow over time, strategic self banking focuses on maximizing
life insurance cash
values, so the whole
life insurance plan can be used strategically as a savings and personal financing vehicle for the purpose
of recapturing your cost
of capital incurred when having to deal with third party lenders or using your own cash.
Part
of the strategy is to work with mutual
life insurance companies that allow flexibility
in borrowing from the
policy and allow the cash
value to accrue regardless
of outstanding
policy loans.
Policies such as variable universal
life insurance combine components
of the above, blending the investment flexibility
of variable
life with the ability to use the cash
value to pay monthly premiums offered
in universal
life.
A
life insurance policy loan is just a loan from the insurer
in which the cash
value of your
policy is used as collateral.
Universal
life insurance is similar to whole
life insurance in that a portion
of your monthly premiums go toward a savings component
of the
policy, called the «cash
value.»
Your
life insurance net cash
value is the «actual» surrender
value of the
policy, and you will typically find it listed separately
in your
life insurance statements.
On the other hand, if your company decides to sell the key person
life insurance policy, you may have to pay taxes, depending on the size
of the settlement, cash
value of the
policy, and the amount that's been paid
in premiums.
Although there are benefits to all types
of coverage, and each
policy has its place,
in our opinion there is a clear advantage
of cash
value life insurance vs term
life.
The primary
value in our estimation
of SBLI's term
life insurance is that you can convert the
policy to SBLI's whole
life insurance.
One
of the key benefits
of the permanent
life insurance policy, is that the cash
value grows tax deferred and withdrawals are taken out on a First
In — First Out (FIFO) basis.
A large portion
of your premiums payments will be invested
in the
insurance company's investment fund
in whatever asset class you prefer (stocks, bonds, mutual funds, money market funds, etc.) Over time, this has the chance to generate a much larger cash
value in your
insurance account than a traditional whole
life policy does.
You can take out a loan on a
life insurance policy's cash surrender
value if you're
in need
of immediate funds.
Also, as permanent
insurance, the cash
value account
in universal
life grows tax - deferred and can be accessed by the policyholder
in the form
of loans or withdrawals, subject to any applicable
policy provisions.
Variable Universal
Life (VUL) is defined as a type
of permanent
insurance policy,
in which the cash
value can be invested into different accounts consisting, for example,
of stocks, bonds and mutual funds.
This means that the
insurance company only had to pay out $ 300,000 at the time
of your death, because you had accumulated $ 200,000
in cash
value during the
life of the
policy.
As with most IUL
policies, the primary benefit
of IUL
insurance is the early cash
value growth, and the Accumulation IUL ranks as one
of the best
in class, competing with only Pacific
Life and Lincoln National
in terms
of overall performance.
This type
of policy is good to consider if you're interested
in not only the benefits
of life insurance coverage, but also using the cash
value as an investment vehicle to diversify your portfolio.
Typically, you will pay consistently higher premiums since,
in the early years
of your
policy, it should accumulate enough
value to off - set the higher
insurance risk that comes
in later
life.
All types
of permanent cash
value policies typically have a specified cash surrender period that must lapse before you can completely withdraw the cash
value in the
policy without paying penalties to the
life insurance company.
Cash
value life insurance, whether whole
life, IUL, or VUL, allows for the tax - free growth
of funds
in a
policy's cash account unless the
policy is canceled or surrendered, transferred or assigned to another owner, or the IRS no longer designates the
policy a
life insurance contract.
And while term
insurance is sold for specific periods
of time, typically anywhere from 5 to 30 years, a cash
value insurance policy is usually considered to be a permanent
life insurance policy, as these products are designed to remain
in force for your entire
life.
In the world
of cash
value life insurance, there is an important thing to understand about your
life insurance policy, namely whether it is a «participating» or «non-participating»
policy.
With a number
of ways to use the money that builds up
in the cash
value account, such as taking out a
life insurance loan or paying
insurance premiums, the flexibility these
policies offer make them attractive to individuals looking to build up savings while at the same time securing
insurance coverage providing leverage
in the form
of a death benefit payout.
And with a properly designed
policy, you can use the cash
value life insurance as a safe bucket, conducting much
of your financing
in and through the
policy.
Cash
value life insurance refers to a type
of life insurance that,
in addition to paying out a death benefit to your beneficiary or beneficiaries upon your death, accumulates cash
value inside the
policy while you are alive, that you can use for whatever you please.
When this happens, if a cash
value life insurance policy was used to fund a key person
policy, the amount
of the cash
value can be taken out
in the form
of an easily accessible
life insurance policy loan, with no origination costs, tax free.
However, given the complexity
of the
policy, the additional costs correlated with permanent
life insurance policies, and the potential to lose the entirety
of the account's cash
value, it's not recommended if your primary intent is to provide financial coverage
in the case
of your death.
In some cases, cash value insurance, specifically whole life insurance, features a minimum rate of return guarantee on funds held in a policy's cash account, which is one of many whole life insurance pros and con
In some cases, cash
value insurance, specifically whole
life insurance, features a minimum rate
of return guarantee on funds held
in a policy's cash account, which is one of many whole life insurance pros and con
in a
policy's cash account, which is one
of many whole
life insurance pros and cons.
Variable
life insurance is also similar to whole
life insurance but, instead
of having a guaranteed rate
of growth, the cash
value of the
policy can be invested
in sub-accounts offered by the insurer.
From a strategic standpoint, the popularity
of cash
value life insurance stems from its ability to both provide
insurance protection and grow funds on a tax - deferred basis — interest and earnings
in policies of this type are not taxable unless a triggering event occurs, such as surrendering the
policy.
A
life insurance policy as a part
of your investment strategy that builds up a cash
value to help cover your expenses
in retirement
If you're considering permanent
life insurance, but are wary
of the complexity
of the
policy and not interested
in the cash
value or investment benefits, guaranteed universal
life insurance is a less expensive way to purchase nearly - lifelong coverage.