Cash Value Component: The Hidden Treasure in a Universal Life Insurance Policy [infographic]

The Catawba River Insurance Group • February 15, 2024

Many savvy policyholders prefer universal life insurance due to its lifelong coverage and flexibility when paying premiums. But did you know that this policy does double duty? In addition to the lifelong coverage, there’s an untapped source of liquidity exclusive to universal life insurance policyholders.

This hidden treasure is known as the cash value component. Unlike other insurance policies, a portion of the premiums paid into a universal life insurance policy is set aside as cash. You can easily access the amount in ways that are uniquely beneficial to you as a policyholder, such as:

  • Surrender Value. If you ever decide to cancel your universal life insurance policy, the accumulated cash value will be paid directly to you. This acts as a built-in safety net offering guaranteed returns from your life investment.
  • Paying for Other Premiums. If money ever gets tight, you can leverage the cash value to help pay your outstanding policy premiums. As a result, your policy won’t lapse unnecessarily.
  • Collateral. Since the cash value in universal life insurance accrues on a tax-deferred basis, you can easily take out policy loans against the amount for large purchases or other urgent financial needs without triggering taxes.
  • Tax-Free Income After Retirement. When you retire, you can extend your nest egg with the cash value. Even better, any withdrawals you make to supplement your retirement income won’t be subject to income taxes.

While the life coverage takes care of your loved ones, the cash value protects you with unique financial privileges that most insurance policies can replicate. Don’t let this hidden treasure slip through your fingers!

If you would like to learn more about the benefits of a universal life insurance policy for you and your family, talk to our insurance team today.

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