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The way cash value grows depends on the specific type of policy — whether it’s whole life, universal life or variable life. These policies differ in how they earn interest, with some offering ...
Whole life features a cash value, which is held in an account that accumulates over time. Whole life insurance interest rates are fixed, with a minimum guaranteed rate. ... Guaranteed whole life ...
The cash values in whole life policies grow at a guaranteed rate (usually 4%) plus an annual dividend. In certain states the cash value in the policies is 100% asset protected, meaning the cash value cannot be taken away in the event of a lawsuit or bankruptcy.
The determination of the cash value, both the base amount and the applicable surrender charge, in the contract can be explicit by determining the value for each surrender date (guaranteed cash values), by referring to the value of specific investments or subject to the discretion of the insurance company, which is often executed to bring cash values in line with values of the investments of ...
That cash component and the fact that whole life insurance guarantees a payout upon death means that these policies tend to charge much higher premiums than term policies. Pros You can borrow tax-free
In a whole life policy, as long as every premium payment is made, the death benefit is guaranteed to the maturity date in the policy, usually age 95, or to age 121. A UL policy lapses when the cash value is no longer sufficient to cover the insurance and policy administrative expense.
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