Cash Value Insurance

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Cash Value Insurance

What is it?

Some would refer to this as Whole Life insurance. There are two types of Whole Life insurance. One is called Participating life insurance and the other is called Non-Participating life insurance. Both offer insurance protection with the potential to grow money tax-free within legislative limits inside your policy over time (called cash value). You can use your policy’s cash value while you are still living. As long as your premiums are paid, your coverage lasts a lifetime. Your initial basic coverage and basic cash value are guaranteed.

When you buy participating life insurance, you are also eligible to receive policyholder dividends, which can be used to buy more coverage, reduce your premium payments or taken as cash. Keep in mind that you may have to pay tax on any withdrawals.

Who is it for?

If you are interested in lifelong insurance coverage that can also be used to help support your financial goals, participating life insurance may be ideal for you and your family. It can also be a practical option if estate planning is your focus, as it gives you the option to increase your coverage to keep pace with inflation or leave more to your loved ones.

How does it work?

Premiums you pay towards your participating life insurance go into an account called the participating account, which is pooled with premiums from other participating policyowners. The insurance company’s asset managers invest the assets in the participating account with the goal of managing risk and increasing its value. The assets are used to pay policy benefits, including death benefits. When the participating account performs well, you may be eligible to receive policyholder dividends. Please note that dividends are not guaranteed.

How does it benefit you and your family?

Unlike term life insurance – which only provides coverage for a set period of time – participating or non-participating life insurance guarantees that you and your family are protected for life, as long as your premiums are paid. Policyholder dividends from a participating life insurance policy give you the opportunity to increase your coverage, reduce your premiums and protect more of your money from taxes while you are still living.

Grow your wealth

Whether you want to supplement your retirement income, fund your children’s education, or realize your dream of starting a business, participating and non-participating life insurance can help you achieve your financial goals through the accumulation of tax-advantaged cash value.