Cash value life insurance provides life insurance protection and can build future savings for your retirement. This type of life insurance is a combination of a death benefit coupled with a savings or investment account. Cash value life insurance includes whole life, universal life, variable life, and variable universal life. Remember, you are buying a life-insurance policy first; the savings portion is secondary.
IMPORTANT NOTE: Invest in a cash value insurance policy only if you need permanent life insurance protection. The primary purpose of life insurance is to pay benefits to your survivors, not to accumulate wealth. Cash value policies do have savings features, but rates of return are often sharply reduced by expenses, especially in the early years of the policy.
Cash value life insurance is for individuals whose spending priorities allow for additional funds to be committed to long-term savings. Consider investing in cash value life insurance if:
When selecting cash value life insurance, you need to decide which type is best for you. You then need to find a good policy. Down the road, you will need to decide if and when you will crack open your insurance nest egg.