Ever wondered exactly how cash value life insurance can help you later in life...say, when you're ready to retire? Let's take a look, using some exact figures to help you see its value.
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Get a Free QuoteCase Study: John Doe
Our client, John Doe, is 29 years old. He doesn't smoke and he's healthy, so he knows he can lock in a low rate if he buys a policy now. He can't afford very much, so he buys a cash value life insurance policy with a small face value of $25,000.
Because he knows he'll probably have a family later, he selects an option called a "paid-up addition." This means that he's allowed to buy more coverage every year using his policy dividends. If he didn't want to buy more coverage, he could also leave those dividends in his account to grow and earn interest over time.
With no additional money out of his pocket, he can provide more coverage for the family he hopes to have someday. Right now, however, his annual premium is $427. In the first year he owns the policy, it has no surrender value, and no cash value.
But something happens the longer John keeps his policy. Let's take a look:
| John's Age | Yearly Premium | Cash Surrender Value | Total Death Benefit |
|---|---|---|---|
| 39 | $427 | $968 | $25,829 |
| 50 | $410 | $5,094 | $30,397 |
| 65 | $403 | $17,831 | $42,523 |
| 80 | $403 | $40,559 | $60,690 |
| 90 | $403 | $58,844 | $74,553 |
Take a look at that cash surrender value. It starts out small, but really offers big benefits later in life. If you needed help paying for retirement or long-term care, that's a good way to go about it.
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Get a Free QuoteIs Cash Value Life Insurance Right for Your Family?
That depends on your specific financial needs. If you don't have a lot of cash to spare right now, you can buy a cash value policy that not only provides you with the coverage your family needs right now, but builds cash value over time.
Are you interested in a secure source of supplementary retirement income? Permanent life insurance may be right for you. Many of my clients appreciate the opportunity to build up cash value over time with the intent of pulling it out later during retirement.
Of course, the biggest benefit of life insurance is the financial peace of mind it provides for your loved ones. As you're shopping and making your decision, don't forget to take that into consideration.
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