Do You Want A High Cash Value Life Insurance Policy?

Several concepts exist that promote how one can use a cash value life insurance policy “as your own bank.” This does not involve starting an actual bank. Instead, it is a concept that allows you to use a cash value life insurance policy instead of a bank. You can use your cash value life insurance policy as a financing tool for purchases and investments. 

* Cash values may be accessed tax-free. However, the cash value in a life insurance policy may be taxable in certain situations. We recommend that you consult with an agent or your tax advisor for more information. 

You can set your minimum and/or maximum contribution to your policy at just about whatever figure you’d like. When you set up a policy, your money will be going into insurance and into cash. The insurance cost is fairly flexible. If you are above the age of 60, the minimum premium amount might not be able to drop below around $1,000 per year, but for the most part, the insurance cost is easy to customize. For your maximum limit, there are some rules to be aware of:

The insurance company is going to have a limit to the amount of cash you can put into a policy compared to the amount you are paying towards insurance. They will allow you to put in 10 times your insurance cost per year into cash.

➜ Example: If you want the ability to put in $10,000/year into a policy, you cannot have an insurance premium of less than $1,000/year.

When: You can withdraw funds for a loan any time you’d like, even within the first week of starting your policy!

How Much: Technically, all the cash in your policy is available to you. However, about 95% of the funds you have in cash at any given time is a more reasonable amount. Leaving about 5% in your policy can be useful if you do not wish to pay the loan back and/or circumstances arise where you are unable to pay the interest or your premium – that little bit left in the policy can cover those costs and prevent a lapse in your policy.