As we continue to explore the basics of life insurance, it’s essential for us to include the concept of “cash value.” Understanding what cash value is, why it matters, and how you can use it is foundational groundwork–for you, and in how Aspen Life Settlements is able to operate.
What is Cash Value Life Insurance?
As we’ve discussed before, there are many different types of life insurance out there, but they can generally be put into one of two groups, based on whether or not they are considered “cash value life insurance.”
Term life insurance is an extremely common kind of policy, purchased by those primarily wanting some kind of financial safety net should something terrible happen. For a predetermined amount of time, (often something like 20 or 30 years) an insurer will provide a death benefit to the beneficiaries of the policyholder if they pass away within the time period. However, if the policyholder outlives the term, (as happens 95% of the time) the insurer does not need to provide a death benefit. At its simplest form, this is all there is to term life insurance.
However, cash value life insurance typically adds two things to the basic idea of term life insurance.
- Lifetime duration. If you’ve heard of a “whole life” insurance policy, it’s exactly what it sounds like. Rather than an insurer providing coverage for a limited time period, the insurer instead provides coverage throughout the lifetime of the insured. Unless the policy is surrendered or premiums aren’t paid, the insurer expects to pay a death benefit–and the policyholder can expect to receive one. This can be very helpful for estate planning purposes, but because the insurer knows they will eventually need to provide a death benefit, they are able to charge a lot more for their coverage than a typical term policy would be.
- The cash value. With the increased cost of a “cash value life insurance” policy comes the benefit of the cash-value feature. Think of it as something resembling a savings account–in the sense that a portion of the premiums you pay goes into it, and over time it grows with interest and occasional dividends. With a whole life policy, this growth is generally conservative and is guaranteed to not go down in value. Meanwhile, some IUL policies tie their growth to the market, providing potentially bigger growth, but also a measure of risk.
A policy’s cash value is more important to some people than to others. It’s possible to take out a loan from the money accrued within the policy or to use it later on in life to supplement retirement income. In other situations, it is just added to the death benefit given to beneficiaries.
Some people, looking for a more immediate way to get cash on hand, surrender or cancel their policies to get their cash value sooner. When this is done, coverage is lost, the death benefit is forfeited, and, because they were younger and likely in better health when they first bought the policy, their future premiums would likely be much higher if they were to eventually start a new policy.
Aspen Life Settlements provides a much better solution for those looking to access their cash value.
This solution provides you with cash on hand–usually equal to or greater than what could be received by surrendering the policy. It also allows you to keep your lifelong death benefit coverage, all while not paying a penny more in premiums. It’s a win-win-win.
By selling your policy to Aspen Life Settlements, we pay you for the policy, take over paying the premiums, and then use the existing cash value of the policy as a place to grow our money, which allows you to keep the death benefit–we aren’t invested in your passing.
You won’t find a better way to check all of the boxes that Aspen Life does. If you’re interested in receiving money for your cash value life insurance policy, saving money from not having to pay premiums, and still get to keep your death benefit, reach out today to see how much your policy may be worth.