Permanent – or cash value - life insurance is one of the most versatile financial tools available, solving a host of financial planning problems for individuals and business owners. Cash value life insurance has evolved over the years from traditional whole life insurance to an array of sophisticated flexible premium life insurance products that are part risk management and part investment.
A distinguishing characteristic of cash value life insurance is the concept of building equity in the policy over time that becomes a financial asset available to use during your lifetime. For example, a significant portion of the accumulated cash value in a permanent policy can be withdrawn on a tax advantaged basis. The growth of cash value generally occurs on a tax-advantaged basis, meaning you pay no taxes on any earnings in the policy so long as the policy remains active.
All forms of cash value life insurance must be managed to make sure the policy cash value and periodic premium contributions are sufficient to support the policy over your life expectancy.
Another quality of cash value life insurance is a lifelong death benefit paid to your surviving heirs at your death. Cash value life insurance can be quite valuable if increasing estate liquidity is a financial goal. Paying estate taxes, buying out a business partner’s estate, discharging debt or balancing inheritances among children are a few examples of how maintaining life insurance throughout your life can be a good financial planning move.
Cash value life insurance is flexible planning tool and we understand its advantages and drawbacks. As life insurance experts, we can assist you to make the right insurance coverage and policy decisions that best meets the needs of your family or business.
