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Cash Value Life Insurance
A type of insurance in which higher premiums are charged at the beginning of the policy than they would be for an equivalent amount of term insurance. The portion of the premium that is not applied to the cost of insurance is invested by the company and accumulates cash value which can be used in several ways. You can borrow against the policy's cash value by taking out a policy loan. If you neglect to pay back the loan and interest on it, that amount will be subtracted from the benefits upon your death, or from the cash value if you stop paying premiums and take out the remaining cash value. You may also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay additional premiums. You can also use the cash value to increase your income for retirement or to help pay for needs such as a child's tuition without cancelling the policy. However, in order to build up the cash value, you have to pay higher premiums in the early years of the policy. Cash Value Life Insurance may be one of several types: whole life, universal life, or variable life insurance.
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