A key characteristic of the cash value feature is that the cash value grows on a tax-deferred basis. If the policy is structured correctly the cash value can be used in the future for many reasons, like supplemental retirement income. However, you need to be careful that you have structured the policy correctly because this is not a retirement plan and systematic withdrawal of cash can cause the policy to lapse. If you structure it properly, having the cash available to borrow for a down payment on a home or to help pay for your children's education is an excellent benefit of a permanent policy. There can be tax implications when you borrow money from a permanent insurance policy, so it is extremely important that we consult with you to insure the proper structure. Another benefit of borrowing from the cash value is that you are not forced to repay the loan during your lifetime. This decision can be delayed for as long as you live. If you have a loan outstanding at the time of death then your beneficiaries will receive the death benefit minus the outstanding loan.
Permanent life insurance is designed to have your premium payments spread out over your lifetime. This helps keep your monthly obligations to a minimum. One key feature of most permanent policies is their flexible premium feature. There are many reasons that someone might want to accelerate their premium payments. Accelerating your payments is essentially over funding the policy in its earlier years and under funding it in its later years. This is extremely helpful when you are trying to minimize your monthly obligations during your retirement years. Over funding will also help produce higher cash value build up and in turn will help sustain the policy.
Contact us to obtain more information or a quote for permanent life insurance.