If you are thinking of investing in a cash value life insurance policy, you should keep in mind that the rates of return are usually very low, compared to traditional investments. In addition, cash value life insurance policies have many fees that lower the amount that you can earn with them. Additionally, if you decide to surrender the policy, you might have to pay a surrender charge.
Cash value life insurance policies have other benefits, such as allowing the policy owner to withdraw money for any reason. This can be used for emergencies, retirement, or premium payments. In addition, cash value life insurance policies often offer the option of taking out a loan. However, note that if you die before paying back the loan, the death benefit will be reduced.
The rate of return on cash value life insurance varies depending on the type of policy. Generally, the premiums paid earlier in life will go toward the policy’s cash value. In addition, the cost of the policy will increase as you get older. The main point of cash value life insurance policies is to accumulate cash value over time. You can boost the growth of your cash value by adding paid-up additions riders.
While cash value life insurance is attractive, it’s not for everyone. For example, a young family might find term life insurance to be sufficient. A term life insurance policy costs only $18 a month, which is a lot cheaper than a cash value life insurance policy.