What is the Cash Value of Life Insurance?

Cash value is the savings component of permanent life insurance policies, such as whole life and universal life. A portion of your premium goes into a cash-value account, where it grows tax-deferred over time—kind of like a built-in emergency fund that you control.

Why It Matters:

✅ Accessible Funds: You can withdraw, borrow against, or even use the cash value to cover your insurance premiums.
✅ Tax Advantages: Your money grows tax-deferred, and loans taken against it are tax-free (as long as the policy stays active).
✅ Retirement Backup: Some use cash value as a safety net for retirement income.
✅ Financial Flexibility: Unlike traditional savings accounts, cash value doesn’t count toward taxable income when borrowed, offering a unique liquidity advantage.

Where to Check Your Cash Value?

Policy Statement: Your life insurance provider sends regular statements that show your current cash value balance.
Contact Your Insurer: Call your insurance company or agent and ask for an updated cash value report.
Online Portal: Many insurers provide online access where you can log in and check your policy details, including cash value.

A Smart Move?

While cash value can be a great financial tool, it’s not a one-size-fits-all solution. Policy fees, interest rates on loans, and the time needed for value growth should all be considered.

Action Step

If you have a life insurance policy, check your cash value balance and see how it fits into your long-term financial goals.

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