Meet Greg. Greg realized that some life insurance can be used as investment tools. This is known as cash value life insurance. Greg even realized that there are some tax benefits associated with this type of insurance. Stick around till the end of this video if you would like to know more about cash value life insurance and how it works.
First, let's start with a clear definition. Cash-value life insurance is a form of permanent life insurance that features a cash value savings component. The policyholder can borrow money against the cash value. The cash value can also be used to pay the policy premiums. A policyholder can stop paying premiums out of pocket if a sufficient cash value is accumulated. While I have your attention, please hit that subscribe button and bell button to join our notification squad.
Unlike term life insurance, cash value life insurances typically have no expiry date. This brings everlasting peace of mind when it comes to caring for loved ones if the policyholder passes away.
But the premiums paid for cash value life insurance is higher than other types of policies. Those premiums are frequently fixed-level payments. A portion of the premiums is used to cover the cost of insurance. The other portion is deposited in the cash value component of the policy. This cash value grows with time and earns interest. The cumulative earnings of the cash value are considered tax-deferred. That’s not bad as an additional feature of a life insurance policy.
But you should know that there is a dark side to the cash value. Insurance companies use it to offset risk by keeping the cash value upon the death of the policyholder. In other words, the death benefit is paid to the beneficiaries while the cash value remains with the insurance company. This would effectively reduce the amount of money the insurance company is liable for. That’s why cash value is often referred to as the living benefit. It is only beneficial while the policyholder is alive. Several ways to access the cash value include borrowing the money, withdrawal, partial surrender.
Accessing the cash value through these methods could effectively decrease the death benefit received by the beneficiaries.
Some policies allow for unlimited withdrawals, while others restrict how many draws can be taken during a term or calendar year. Other life insurance policies limit the amount of cash removal to a specific amount only.
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------ Contents of This Video ------
00:00 - INTRODUCTION
00:26 - CASH VALUE DEFINITION
00:35 – BORROW MONEY
00:55 – NO EXPIRY DATE
01:05 – PREMIUMS
01:29 – TAX DEFERRED EARNINGS
01:37 - LIVING BENEFIT
02:00 - ACCESSING CASH VALUE
02:15 - WITHDRAWALS

Useful Resources:
https://www.prudential.com/
https://www.statefarm.com/
https://www.newyorklife.com/
https://www.northwesternmutual.com/
https://www.transamerica.com/individual/
https://www.mutualofomaha.com/
https://www.usaa.com/?akredirect=true