Cash value life insurance is permanent insurance, which means your premiums remain level and your coverage will always be in place. Another obvious attribute is the cash value feature. Cash value sounds like a very positive feature of a life insurance policy, but most of us don’t really know what it entails. This article will review how cash value insurance differs from other types so you can decide if its the right type for you.

Cash value life insurance has a much larger premium than a term insurance policy because it is permanent coverage that will last you for the rest of your life. Based on your age and the amount of insurance you need, the premium could very well be up to ten times higher than a term policy. That’s because your premium goes toward insuring your life as well as investment portion that makes up your cash value account. This investment portion is set aside and put into various places like stocks, bonds, or other funds, and most companies guarantee a minimum return. As you make your premium payments, your cash value should continue to grow.

If you want to use the cash value in your policy, then you can do so in a couple different ways. You can borrow your cash value by using your policy as the collateral. Keep in mind that the carrier will charge you interest for borrowing that money. If you aren’t able to pay it back or if you choose not to, then the amount plus interest will reduce the death benefit upon your passing. Another way to access the cash value is by simply giving up your policy. This option may have tax consequences, so you may want to talk with your tax advisor before doing so.

There are three main types of life insurance that have cash value growth:

Whole Life: This is basic permanent life insurance coverage. It has a fixed level premium and cash value with guaranteed minimum returns. Many carriers will also share dividends if the company does well.

Universal life insurance- This is a more flexible type of permanent coverage because your premiums can vary. You can choose to pay more towards your policy and you can even skip a payment if you need to. The downside to this is that your policy can lapse if you don’t make enough payments or if your cash value account doesn’t perform well.

Variable Life: This type of policy has more risk because you have the option of investing your premium payments. If your investments grow, then the cash value in your policy will also grown. On the other end, if your investment choices are poor, then your policy can lapse.

If you aren’t sure whether or not a cash value policy is right for your situation, then make sure you speak with an agent who can go over your needs and wants. While most families can get the right coverage with term life insurance, cash value insurance also has many long term benefits that you may find attractive.

It is best to compare multiplecash value insurance quotes to determine which carrier is most affordable for you. There is coverage available for children all the way up to age 80 life insurance.