Life insurance is indispensable for individuals needing to provide for their dependents once they’re gone. There are two primary types of this insurance – term life and whole life. While term life policies don’t have any cash value, whole life policies do. This component is part of the appeal of these policies. If you’re considering life insurance, you can learn more by contacting us at Baldo-Downs Insurance LLC in Tuscaloosa, AL.
What Is a Cash Value?
A cash value is an amount attached to your life insurance policy that you can borrow against. The policy’s cash value changes over time, and you can borrow that sum. This feature is beneficial as it offers a form of financial sanctuary in case of emergency. The money becomes available to you as a loan, repaid like any other loan with regular payments. This accessibility can be a lifeline for many policyholders.
How Is the Cash Value Generated?
When you pay your insurance premiums, the insurance company invests those amounts. This investment generates a profit, enabling them to pay out death benefits. As your premiums are invested, they typically generate a steady profit. Over time, a small portion of that profit becomes the cash value of your account. Generally, the longer you have the policy, the higher your cash value.
Secure Your Whole Life Insurance Policy
If you’re interested in the advantages of holding a whole life insurance policy, we’re here to help. Contact us at Baldo-Downs Insurance LLC in Tuscaloosa, AL, to get started.
