There is a mistaken idea that goes something like “nobody likes to think about life insurance because you have to die for it to be worth anything.” That is fundamentally untrue. Many types of life insurance have investment characteristics and build up value over time, which may benefit the policyholder.
Here is a brief overview of some life insurance investment characteristics to consider. Talk to your agent at Brock and Poole Insurance Agency, serving Collierville, TN and the surrounding area, to learn more about the details that are the best solutions for your particular financial circumstances.
Cash Value
Whole life insurance has level premiums for a person’s life and is meant to be owned as permanent life insurance. Over time, as a person gets older, whole life insurance builds up cash value.
Borrowing against cash value gives policyholders access to tax-free money because this is a loan, not income. Since the funds are secured by the policy value, the cost of borrowing is usually very low. This can be helpful when someone goes through a financial challenge.
If a person lives long enough and pays premiums for whole life insurance for a long time, the policy may reach a paid-up status and not require any further premium payments.
Alternatively, the cash value might be used in a tax-free exchange to create a monthly annuity payment that the policyholder gets themselves for the rest of their life. No death is required for this benefit!
Dividends and Interest
Some policies pay an annual dividend that can either be received as income each year or used to pay premiums or build up more value in the insurance. Other policies may have a built-in interest payment amount that increases the value over time.
Market Indexed
Some universal life policies use an investment strategy based on a stock market index or other investments. These policies may create extra value if the underlying investment becomes worth more and some offer protection from any risk of losing value.
Summary
There are many choices of life insurance products to consider. Contact your agent at Brock and Poole Insurance Agency in Collierville, TN to find out more about how life insurance is an important part of long-term financial planning.
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