What Is Cash Value?

Cash value is a feature of a permanent life insurance policy that gains dollar value as it ages. But the cash value isn’t as much as the benefit value, which the amount of financial benefits your policy will provide.

A Permanent Life Plan Invests Money

A permanent policy builds cash value over time and acts as an investment. When you pay your premiums, part of the payment goes to your benefit’s value and part goes to cash value.

And when you are younger, usually a larger percentage of your premiums go to cash value. As you get older, it shifts toward your benefit’s value. But as the money from your premiums adds to your cash value, it builds interest just like any retirement investment plan.

For many permanent life policies, interest will build at 6%. And if for some reason you want to withdraw money from the cash value of your policy, it’s usually done with a loan. But taking out money can hurt the benefit value of your life plan, so it’s best to leave your cash value untouched.

A Bonus To Your Family's Financial Protection

A permanent plan’s cash value and investment features are extra bonuses to go along with protecting your family’s future. But you shouldn’t rely on your life policy’s cash value as your only retirement savings fund.

Saving for your future, your retirement for example, takes a lot of careful planning. And even though a permanent life plan will make sure your family will have financial security, it's always better to save as much as you can for your family with other safe investments.

The most important part of a life policy is providing protection for your family, if you couldn’t be there to provide for them. But life policies are complicated legal agreements, so our licensed professionals can help you make an educated decision.

When you request free quotes, you’ll find and compare different life policies in just minutes.