Liquidity Concerns In Your Life Insurance Policy

​Liquidity is one of the top concerns regarding life insurance policies. This post will explore some of the liquidity concerns that policyholders have and what you can do to ensure that your policy is as liquid as possible. Keep reading to learn more!

How does cash value work?
Permanent whole life policies offered by insurers typically include a death benefit that builds up some amount of savings. The interest rates on these accounts are guaranteed at a fixed interest rate, and the insurance may also provide dividends.

Although dividends paid by your life insurance policy are not fixed because they are based on its success. Knowing and understanding the conditions of your life insurance plan is the key to knowing how much your policy is guaranteed to increase and how much increase is possible.

Assessing Policy's Cash Value: Loan or Surrender?
Getting a loan from your policy is easy since it won't need bank approval or run a credit check. Although the policy's cumulative cash value secures the loan without tax, you could not get more than its value. But when not repaid, the insurance company can automatically cut your death benefit.

Surrendering the whole policy, however, means your dependents will no longer receive your death benefits. Moreover, the taxable cash value you'll get is way less than what you have paid in your premium.

What are Accelerated Death Benefits?
When you have a severe or fatal disease or require professional long-term care, for example, an expedited death benefits rider allows you to receive a portion of the death benefit. Considering the conditions of your policy, you may receive accelerated death benefit payouts in a flat sum or increments. If the beneficiary is likely to die within two years, accelerated death benefits are usually not taxed.

Conclusion
The long-term increase of the cash value plus permanent life insurance coverage provides most of the advantages of a whole life policy. Talk to your insurer and explore all of your choices for getting higher cash value from your policy. 

At Medicare Supplement Store, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (732) 252-8828. Get your free quote today by CLICKING HERE. The coverage discussed is not guaranteed. Please contact our agents to make sure you have adequate coverage and your needs are being met. We are happy to help!