TERM (NON CASH VALUE) VS. WHOLE LIFE (CASH VALUE)
Term Life Insurance has no cash value, it’s worth the face value of the policy as long as you pay your premiums. If you fail to pay your premium for 30 days, you will be informed that your policy is going to lapse (become no good). Yes, you can get it back by paying your missed premiums but if you could afford to pay your premiums you shouldn't have let the policy lapse.
Some Term Insurance goes up in cost as you grow older every 5 years or so. Then, once you reach a certain age it goes up every 3 – 5 years. Sure it will stay with you until you are 90 years old but who can afford it at that age? Be sure you ask your agent to open your policy and explain it to you when they come to deliver it to you. Don’t just sign the Placement Form without having them to re-educate you on what you have purchased and how it works.
Whole Life Policies on the other hand grows cash value. The cash value bucket grows every time you pay your premiums. As you make your monthly premium you are paid a percentage in dividends. Again, open your policy when you get it. There is a page that will show you this information, so you can have an idea as to how much cash is available in your policy by what age/year. Yes I said AVAILABLE. It’s available to you.
You can use the cash value to pay your premiums when things get tight for you. Why go creating loans when you find yourself in need of funds? Use what you have available to you in your life insurance policy. Yes, it is considered a loan and usually has an interest rate of 8% or so, unless you know the secret phrase. What’s the interest rate on the loan that you would otherwise go create at a bank or any other lending institution?
Upon your death, your family is only going to be paid the face value of the policy, the cash value goes back to the insurance company. So I educate my clients to use it or lose it! Call Stevie Swain at 513-818-1753, ext 4.