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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