Written by Davina of RebeccaRice.net
Cash value life insurance is a “both/and” asset. As you keep funding your life insurance policy, the cash value grows, and before you know it; you have options. Do you need money for an emergency? You’ve got it. An lucrative opportunity? Yes, you can! What about a honeymoon, a business start-up, or a down payment on a rental property? Go right ahead.
Your savings continue to grow and earn while you gain access to the cash you need for an emergency, an investment, or a major purchase. Then, you can repay the loan on your own time schedule. Extra payments or a lump sum? Of course! Need to skip a couple of payments? No problem. (We do recommend that you pay your loan back diligently, as that will minimize interest and will give you access to borrow against the cash value again, should you need to.)
When you have a solid, liquid asset such as life insurance cash value, you can leave that asset intact, and easily borrow against it. This leaves you with your original savings plus access to cash for your neighbors car, your child’s tuition, or the investment that will pay healthy returns. Best yet, your savings will keep growing, offsetting some of the interest costs. (You may even be able to use your policy cash value to obtain a bank loan at an even lower interest rate!)
Typically, you have to choose between investments, savings, or insurance vehicles. With whole life insurance however, you are saving and insuring at the same time. Not only will you eventually have access to every dollar put into the policy as your cash value grows, you’ll also have protection over and above the cash value the moment your first premium is paid.