Life Insurance That Builds Cash Value

Shawn Plummer

CEO, The Annuity Expert

If you are looking for a life insurance policy that builds cash value, you have come to the right place. In this guide, we will discuss the different types of life insurance policies that offer this feature, and we will also provide some tips on finding the best policy for your needs. So, whether you are just starting your career or nearing retirement age, there is sure to be a life insurance policy that fits your needs!

What is Life Insurance Cash Value?

Cash value insurance is a form of permanent life insurance. The death benefit is combined with a savings component that accumulates cash value, which can be accessed while the insured is alive. A large part of your premium goes to build up the value of your policy early on. As you age, more money is spent on life insurance premiums.

A retirement income policy is another term referring to cash value life insurance.

Here are the different types of permanent life insurance policies:

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What Is Cash Value Life Insurance Designed For?

Cash value insurance is a way to build money over time in your policy. In many cases, you can take out the money you’ve built up as a loan or withdrawal. You can also use it to pay your policy premiums later.

Components Of A Permanent Life Insurance Policy

Permanent life insurance policies offer two components:

  • Death Benefit: “Face Value” is the amount paid to beneficiaries when the insured person passes away.
  • Cash Value: an additional feature that might make your policy more valuable because you may be able to access the money while you’re still alive.

How Does Cash Value Life Insurance Work?

A cash value policy’s premiums are usually set at a fixed rate or grow based on an external stock market index such as the S&P 500. A portion of your premium is used to create the death benefit. Another part is used to maintain the cash value of your insurance.

Usually, the cash value of a life insurance policy starts to grow after two or five years. Once it begins to grow, you can generally access it according to the policy’s guidelines.

Your policy’s cash value is only available to you while alive. The death benefit will be paid to your beneficiaries if you die. If any cash value remains, it will return to the insurance company.

How Can I Withdraw Cash Value From Life Insurance?

Since you can only use the cash value of your life insurance policy while living, it is essential to use it. Here are four ways you may be able to access its cash value:

  • Make a withdrawal from the cash value
  • Take out a loan
  • Surrender the policy
  • Use the cash value to help pay premiums

Withdrawing Money from your Cash Value Policy

With universal life insurance, you may be able to take some of the cash value out as a partial withdrawal. However, with whole life insurance, the only way to access the cash value without canceling the policy is by taking out a loan from the insurance company.

Taking Out a Loan on Your Policy

Cash-value life insurance policies can let you borrow money to pay a home mortgage early, cover a child’s college tuition, or go on vacation. However, if you don’t pay the loan and all interest back before you die, your death benefit will be reduced by the amount of the loan and any fees. In addition, loan money is not considered taxable income.

Surrendering Your Life Insurance Policy for its Cash Surrender Value

A “surrender” is when you cancel your policy, and in return, you receive the life insurance cash surrender value. When this happens, you no longer have life insurance coverage. Your ” equity ” will be the amount of money you paid into the account, and interest that has added up over time will be your “equity.”

Fees When Surrendering Your Life Insurance Policy

  • Any outstanding loans or unpaid premiums on the policy
  • Additional surrender fee
  • Income tax on the money you receive.

Increase The Death Benefit or Pay The Premiums

You can choose to use your cash value balance to help pay for your premiums or ask to have your death benefit increased.

A cash value policy will give you multiple options for what to do with the money you save over time. You can use it for yourself during your lifetime or leave it to your heirs after you die. This policy also provides a significant death benefit for your loved ones.


Cash value life insurance may be the right option if you are looking for a permanent life insurance policy with a savings component. These policies can grow a lot of money over time, and if you are healthy and under the age of 35 when you buy one, you will have access to that money should you need it. Request a quote below to learn more about cash value life insurance policies.

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Life Insurance That Builds Cash Value

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Frequently Asked Questions

What types of life insurance build cash value?

Cash value is a common variable, whole, and universal life insurance feature. Term life insurance does not have cash value.

Who offers the best life insurance with cash value?

Protective whole life insurance and North American Indexed Universal Life Insurance offer the best life insurance with cash value due to growth ability and the company’s A+ (Superior) rating with A.M. Best.

What is the cash value of a $10000 life insurance policy?

The cash value of a $10,000 life insurance policy depends on the type of policy and the insurer. Whole life policies generally have a higher cash value than term life policies, and older policies tend to have a higher cash value than newer policies. The cash value of a life insurance policy is usually equal to the death benefit minus any outstanding loans or other debts against the policy. Some insurers charge a surrender fee if the policy is cashed in early. To get an accurate estimate of the cash value of a life insurance policy, it is best to contact the insurer directly.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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