Cash value life insurance gives you more than just death
benefits. It can also be a long-term savings account or stock market
investment. Cash value life insurance is seen in many variations,
known as whole life, universal life and variable life.
Cash value life will cost more than term life. Be prepared to pay
much higher premiums because you aren't simply funding your life
insurance, but a savings account as well.
Many cash value policies have an annual premium that will not
increase from year to year. The premium amount remains the same
throughout the premium-paying period. There are many universal life
policies that will allow you to adjust your death benefit amounts or
skip premium payments for a certain amount of time.
Because cash value life policies are confusing and vary from
company to company, regulators require that cash value insurance be
sold using pre-approved illustration formats. The documents can be
15 pages or more. The illustrations are divided into two sections:
the guaranteed section and the projected section.
Look closely at the guaranteed death benefit and premium payment
sections. If you don't agree with what is there, walk away before
you sign anything.
You should make your choice very seriously, as many cash value
policies contain harsh penalties for surrendering coverage early in
the policy.
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