Know your 'cash value'?

Allen Wastler

By Allen Wastler
Allen Wastler is a former financial journalist with over 30-years of experience, including time at CNBC, CNN, and Knight-Ridder Newspapers.
Posted on Jun 20, 2019

Do you know what “cash value” is?

If you own a whole life insurance policy, chances are you do. But, if you don’t, then chances are you might not. But you might want to. It can be pretty useful.

Life insurance’s primary purpose is to provide a death benefit when the insured person passes. But some types of insurance build cash value as premiums get paid. And this cash value can grow over time.

You can borrow from your cash value for any purpose, like paying college tuition or covering an emergency expense. Of course, there are consequences, as borrowing against cash value increases the chances that the policy will lapse, reduces the cash value and death benefit, and may result in a tax bill if the policy terminates before the death of the insured.

Nevertheless some folks find that the cash value of a life insurance policy is a nice feature to have.

And now you know.

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.