Life Insurance 02. Cash Value Life Insurance

Question 1

1. What is CASH VALUE LIFE INSURANCE?

Answer 1

It is a type of insurance where the premiums charged are higher at the beginning than they would be for the same amount of TERM INSURANCE.

Question 2

2. Why is CASH VALUE LIFE INSURANCE costlier at the beginning?

Answer 2

Because the part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways.

Question 3

3. What are the various ways that a CASH VALUE LIFE INSURANCE may be used?

Answer 3

a. You may borrow against the policy’s cash value. If you don’t pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value.

Question 4

4. You can also use CASH VALUE to:

Answer 4

keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums.

Question 5

5. You can also use your CASH VALUE to:

Answer 5

increase your income in retirement or to help pay for other needs such as a child’s tuition without cancelling the policy.

Question 6

6. However, to build up the CASH VALUE, you:

Answer 6

must pay higher premiums in the early years of the policy.

Question 7

7. CASH VALUE LIFE INSURANCE may be one of several types:

Answer 7

a. Whole Life
b. Universal Life
c. Variable Life

Question 8

End

Answer 8

End