Grow your money with life insurance | Tips & Resources | Grange Insurance

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As many know, life insurance is financial protection for your family and loved ones after your death. But did you know that some life insurance policies include something called cash value that grows over time? And did you know that some of those policies allow you to access that cash value while you live?

Permanent life insurance policies are for life and have a cash value that increases over time. These permanent policies contain a death benefit (or face amount), which is the amount paid at death, and a cash value that grows over time on a tax-deferred basis, similar to retirement savings plans or tuition.

Reading: How to put money in life insurance

how does cash value work?

The type of permanent policy you have will determine how your cash value accumulates over time. While certain permanent policies also allow you to put additional money into the policy to increase your cash value, keep in mind that there are limits to how high your cash value can get relative to your death benefit. if a policy is overfunded, it is considered an investment and loses its tax benefits. But don’t worry, your insurer will monitor the policy to make sure it meets the guidelines.

In addition, many permanent policies allow you to withdraw your cash value at any time and for any reason, whether it’s for a down payment on a house, to pay for your children’s education or to generate additional income for your retirement. You can even delay premium payments by using the cash value to continue your life insurance payments and maintain your current life insurance protection.

what happens to the cash value after death?

See also : Why Insurance Should Be Part of Your Financial Plan | Hippo

When a death claim is filed, the contract is terminated and the cash value is prevented from growing further. then, depending on the type of policy and the death benefit, the cash value may or may not be paid in addition to the death benefit. therefore, it’s best to check with your independent agent to learn how a specific permanent life insurance policy handles cash value after death.

types of permanent life insurance

There are four types of permanent life insurance: whole life, universal life, variable life, and variable universal life. talk to an independent agent to help you determine which one is best for you.

all life.

whole life is your simplest and virtually risk-free option. premiums do not change with whole life policies. In addition, the death benefit and cash value amounts are guaranteed. When you buy whole life, you’ll receive a chart with predetermined cash value amounts for each year of your policy. So if you wanted to take out your cash value, but didn’t know how much you had to take out, you’d take a look at this chart to determine what your cash value is at that particular point in your contract.

universal life.

Universal Life Insurance (UL) policies are a combination of a death benefit and an interest-bearing savings account. Today, typical interest rates for UL policies are around 3-4% and are reviewed periodically and adjusted as needed. there is also a minimum interest rate established in the contract. ul offers the flexibility of adjustable premiums, which means you can pay less when you’re on a tight budget or pay more when you have extra money. The policy comes with a guaranteed minimum death benefit, if your premium payments can support it, and a higher potential cash value due to the policy’s accrual of interest, as well as the ability to increase your premiums.

variable life.

variable life (vl) has fixed premium payments. however, these fixed premiums are allocated between investment options, similar to mutual funds. their cash value depends on the performance of these investments. this transfers the investment risks from the insurance company to you. While there is a chance you could achieve a much higher cash value, there is also a risk you could lose some or all of your cash value as well.

variable universal life.

See also : Salesforce.com (CRM) Q4 2022 Earnings Call Transcript | The Motley Fool

Variable Universal Life (VUL) combines the investment aspect of VL with the flexibility of adjustable premium payments at UL. You can allocate your funds, tax-free, to investment options with varying degrees of risk and reward. If your needs change after you purchase the policy, you can change the amount of coverage you receive without creating a new contract. If you’re short on money, you can use your cash value to cover policy expenses. conversely, you can also increase your premiums or make a balloon payment to help increase your cash value. Like variable life, this too is a policy with more risk and more potential reward than whole life. but it offers flexibility in case your needs change over time.

ask your grange life independent agent about term and permanent policies that fit your needs.

To learn more about life insurance and to estimate how much coverage you need, we recommend visiting www.lifehappens.org and speaking with your independent agent.

This article is not intended to be used, nor may it be used, by any contributor for the purpose of circumventing us rights. uu. federal, state, or local tax penalties. it is written to support the promotion of the matter discussed here. grange life insurance company does not provide tax, accounting or legal advice. Any taxpayer should seek advice based on their particular circumstances from an independent tax advisor.

all life policies are underwritten by grange life insurance company, columbus oh, or kansas city life, kansas city, mo, and are subject to underwriting approval. not available in all states.

Source: https://amajon.asia
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