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Cash Value Life Insurance: What Is It, and Who Should Get It?


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Brokers International
Personal Finance Insider


Mark Williams
Ronda Lee

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The New York Times
SOURCE: https://www.businessinsider.com/personal-finance/cash-value-life-insurance
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Summary

also has a death benefit, but there's no cash value and your policy will expire after a specified amount of time.The difference between term life insurance and permanent life insurance is similar to the difference between renting an apartment and owning a home. "In the early years of overpayment, the cash value put inside the policy earns interest and you use that bucket of money to offset the cost of insurance when you're older," said Mark Williams, CEO of Brokers International.The big difference between the types of permanent life insurance policies is how they manage the cash value —  in the insurance company's portfolio, stock market, or annuities.You can use the cash value of a permanent life insurance policy during your lifetime, for things such as paying your children's college tuition, funding a business, or purchasing a second home. Due to these features, permanent life insurance can function as an investment and wealth-building tool.One reason that people get permanent life insurance is for the cash value and ability to get loans tax-free without using other assets as collateral. If you borrow money or take out a loan against your permanent life insurance policy's cash value, you don't pay tax on the loan, but you will pay interest. If you have enough cash value or dividends on your policy, you could be able to use the dividends to pay back the loan, depending on the type of permanent life insurance product you have. For example, if you have $200,000 in permanent life and $300,000 in term for 20 years, at the end of 20 years the term life insurance policy goes away but you still have your $200,000 permanent policy that has earned cash value.If you're considering permanent life insurance, it's wise to consult an accountant and financial advisor to determine which policy is best for you and the tax benefits and implications.

As said here by https://www.businessinsider.com/personal-finance/cash-value-life-insurance