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When most people hear “life insurance,” they think of one thing: a payout after they’re gone. They see it as a necessary expense, a checkmark on their financial to-do list. But what if it could be a dynamic asset you use while you’re very much alive? What if it could be a source of capital for your next big investment or a safety net for your business? This is where a specific type of policy changes the conversation. Life insurance that covers an insured's whole life with level premiums is designed to be what we call The And Asset®—providing a death benefit and a living benefit. This article will show you how it works.
Whole life insurance is a type of permanent life insurance designed to cover you for your entire life. Unlike term insurance, which only covers a specific period, a whole life policy doesn’t expire as long as you pay the premiums. The "level premium" part is exactly what it sounds like: your payment is fixed and will never increase. This predictability makes it a cornerstone for long-term financial strategies.
This structure provides two powerful benefits that work together. First, it includes a death benefit that will be paid to your beneficiaries. Second, it builds a separate "cash value" component that grows over time. This cash value is an asset you can access and use while you're still living. For entrepreneurs and investors, this combination of protection and accessible capital makes it a uniquely powerful tool. It’s not just an expense; it’s a multi-faceted asset that supports your broader financial plan. By locking in your premium today, you create cost certainty for decades to come, allowing you to plan your financial future with confidence.
Think of whole life insurance like this: each time you pay your premium, you’re doing two things at once. A portion of your payment covers the cost of the death benefit, ensuring your loved ones are protected. The remaining portion is funneled into a cash value account, which acts like a personal savings and growth engine inside your policy.
This cash value grows steadily over the years, creating an accessible pool of capital. This dual function is why we refer to it as The And Asset®—it provides a death benefit and a living benefit. You don't have to choose between protecting your family's future and building accessible wealth for today. The policy is structured to do both simultaneously from day one.
One of the most compelling features of whole life insurance is the fixed, or level, premium. The amount you agree to pay when you first open the policy is the same amount you’ll pay 10, 20, or even 40 years down the road. In a world where the cost of everything from healthcare to housing seems to constantly rise, this stability is a massive advantage.
For anyone managing a business or personal budget, this predictability removes a major variable from your long-term retirement planning. You know exactly what this foundational financial tool will cost you for the rest of your life. This allows you to allocate other resources with greater confidence, knowing this key expense is locked in and will never be subject to inflation or market volatility.
The cash value in your whole life policy is your money, working for you behind the scenes. As you pay your premiums, this account grows on a tax-deferred basis, meaning you don't pay taxes on the gains as they accumulate. This allows your money to compound more efficiently over time compared to a taxable investment account.
This isn't just money you have to wait to use. You can access your cash value through policy loans or withdrawals to fund opportunities, cover emergencies, or supplement your income. Taking a loan against your policy typically doesn't require a credit check and comes with flexible repayment terms. This transforms your life insurance from a simple safety net into a dynamic financial tool you can use to build and protect your wealth throughout your life, as many of our client stories show.
A level premium whole life policy is much more than just a safety net; it's a dynamic financial tool built for stability and growth. When structured correctly, it becomes a cornerstone of your financial strategy, offering a unique combination of protection and asset accumulation. Let's break down the four key advantages that make this type of policy so powerful for long-term wealth building.
One of the most significant features of a whole life policy is its permanence. Unlike term insurance, which covers you for a specific period, whole life coverage is designed to last your entire life. As long as you meet your premium obligations, the policy remains in force, providing a death benefit for your loved ones no matter when you pass away. This steadfast protection offers peace of mind, knowing your family and legacy are secure. It removes the uncertainty of having to re-qualify for coverage later in life when your health may have changed.
With a level premium policy, the amount you pay is fixed for the life of the policy. Your premium is determined when you first sign up and will not increase over time, regardless of your age or changes in your health. This predictability is a massive advantage for long-term financial planning, especially for entrepreneurs and investors whose incomes can fluctuate. You can confidently build these payments into your budget for decades to come, eliminating surprises and creating a stable foundation for your financial plan. This consistency makes it easier to manage cash flow while building a valuable asset.
This is where a whole life policy transforms from simple protection into a powerful asset—what we call The And Asset®. A portion of every premium you pay funds a cash value component that grows at a contractually set minimum interest rate. This growth is tax-deferred, meaning you don’t pay taxes on the gains as they accumulate, allowing your money to compound more efficiently. Many policies from mutual insurance companies are also eligible to earn dividends, which can further accelerate your cash value growth. This creates a stable, liquid asset you can access for opportunities or emergencies.
At its core, life insurance is about protecting the people you care about. A whole life policy provides a death benefit that is paid to your beneficiaries, typically free from income tax. This provides your family with immediate liquidity to cover final expenses, pay off debts, or maintain their lifestyle without financial strain. For high-net-worth individuals and business owners, this benefit is a crucial part of a well-designed estate plan. It can be used to equalize inheritances among heirs, provide for a special needs child, or ensure a smooth business succession, solidifying the legacy you’ve worked so hard to build.
When you hear the term "life insurance," you might picture a single, straightforward product. But in reality, life insurance is a category of financial tools, each designed for a different job. Choosing the right one depends entirely on what you want to accomplish. Are you looking for simple, temporary protection for your family, or are you building a financial foundation that provides lifelong security and a place to grow your wealth?
Understanding the key differences between policies is the first step toward making a decision that aligns with your long-term vision. The main players you’ll encounter are term, universal, and whole life insurance. Each has a distinct structure, cost, and set of benefits. Think of it like choosing a vehicle: a sports car is great for speed, but a truck is what you need for heavy lifting. Let’s break down how whole life insurance stacks up against the other common options so you can see which one fits your financial strategy.
The simplest way to think about this comparison is renting versus owning. Term life insurance is like renting. You pay for coverage for a specific period—typically 10, 20, or 30 years—and if you pass away during that term, your beneficiaries receive a payout. If the term ends and you’re still living, the coverage expires, and you have nothing to show for the premiums you paid. It’s pure, temporary protection.
Whole life, on the other hand, is like owning. It’s designed to cover you for your entire life. As you pay your fixed premiums, you’re not just paying for a death benefit; you’re also building equity in the form of a cash value account that grows over time. This is a living benefit you can access and use while you’re alive.
Both whole life and universal life are types of permanent insurance, meaning they don’t expire. The main difference comes down to predictability versus flexibility. A whole life policy is built on stability. Your premiums are fixed and will never increase, and your cash value growth is based on a contractually agreed-upon schedule. It’s a straightforward, set-it-and-forget-it approach.
Universal life insurance offers more flexibility. It allows you to adjust your premium payments and death benefit amount over time. However, its cash value growth is often tied to current interest rates, which can fluctuate with the market. This means a universal life policy requires more hands-on management to ensure it performs as expected and doesn’t lapse.
It’s true that whole life insurance premiums are higher than term life premiums. But comparing them on cost alone is misleading because they are fundamentally different products. With term life, you’re only paying for a death benefit. With whole life, your premium covers the cost of lifelong insurance and funds a cash value asset.
A better way to view the cost is to consider the net value. While the initial payments are higher, a significant portion of that money is building your cash value, which you own and can use. This cash value component is a core part of what makes whole life a powerful tool in a comprehensive financial plan, like The And Asset. It’s not just an expense; it’s a way to strategically position capital for future use.
One of the most powerful features of a whole life policy is its cash value component. Think of it as a personal savings account built right into your life insurance, one that grows with tax advantages over time. This isn't just money that sits there until you pass away; it's a liquid asset you can use during your lifetime. Understanding how to access and use this money is key to making your policy work for you and your family's financial goals. Let's walk through how the cash value grows and the different ways you can tap into it when you need it.
When you pay your premium for a whole life policy, you’re doing two things at once: funding your death benefit and building your cash value. A portion of each premium payment is dedicated to this cash value, which grows on a tax-deferred basis. In the early years of the policy, this growth can feel slow as more of your premium goes toward the insurance costs. However, as time goes on, the growth accelerates, thanks to the power of compounding interest and potential dividends. This is why we see it as a long-term asset. A properly structured policy, like The And Asset®, is designed to maximize this growth, turning your policy into a powerful financial tool for life.
When you need funds, you have two main options for accessing your cash value: taking a policy loan or making a withdrawal. A policy loan is not what it sounds like; you aren't actually taking money out of your policy. Instead, you're borrowing money from the insurance company and using your cash value as collateral. This is a huge advantage because the cash value in your policy can continue to grow and earn dividends even with a loan against it. Loans are also generally not considered taxable income. A withdrawal, on the other hand, involves permanently taking money out of your policy. This will reduce your cash value and death benefit. While withdrawals up to your cost basis (what you've paid in premiums) are typically tax-free, any gains you withdraw are taxable. Understanding the tax implications is crucial before making a decision.
Accessing your cash value during your lifetime will affect the death benefit that your beneficiaries receive. It’s important to plan for this. If you take out a policy loan, any unpaid balance plus accrued interest will be deducted from the death benefit when you pass away. For example, if you have a $1 million policy and an outstanding loan of $100,000, your beneficiaries would receive $900,000. A withdrawal permanently reduces your death benefit. Because accessing your cash value can have a lasting impact on your legacy, it's a good idea to align these decisions with your overall estate plan. We always recommend speaking with a financial professional to model how a loan or withdrawal might affect your long-term goals.
Not all whole life insurance policies are built the same. Think of it like buying a car—the base model will get you from A to B, but the real value comes from understanding the different trim levels, engine options, and available upgrades. When you’re shopping for a policy, the details matter. You need to look beyond the surface to find a contract that truly aligns with your financial strategy.
This means comparing the core features, understanding how dividends can accelerate your policy's growth, and knowing which add-ons, or "riders," can provide extra layers of security. It also means getting clear on how you can access your cash value through policy loans. Let's break down what you need to look for to find a policy that works for you, not just for the insurance company.
When you're comparing whole life policies, start with the fundamentals. First, the policy is designed to provide lifelong coverage. As long as you pay your premiums, your death benefit remains intact. Second, these policies come with level premiums, which means your payment amount is fixed and won't increase over time. This predictability is a huge advantage for long-term financial planning. Finally, and most importantly for building wealth, is the cash value component. A portion of every premium you pay contributes to a cash value account that grows at a contractually determined rate, tax-deferred. This is the living benefit you can use for opportunities or emergencies down the road.
If you purchase a policy from a mutual insurance company, you are technically a part-owner of that company. Because of this structure, you may be eligible to receive annual dividends. Think of dividends as a share of the company's profits. While they aren't a sure thing every year, they can significantly enhance your policy's performance when they are paid. You typically have a few options for how to use these dividends: take them as cash, use them to pay down your premiums, leave them to accumulate interest, or—our preferred method—use them to purchase additional paid-up insurance, which increases both your cash value and your death benefit.
Riders are optional provisions that you can add to your base policy to enhance its benefits, usually for an additional cost. They allow you to tailor your coverage to your specific needs and life circumstances. For example, a Waiver of Premium rider can cover your premium payments if you become totally disabled and can't work, ensuring your policy doesn't lapse when you need it most. Properly structuring a policy with the right riders is a key part of creating The And Asset®, as it allows you to maximize your cash value growth and build a more efficient financial tool.
One of the most powerful features of a whole life policy is your ability to borrow against your cash value. This isn't like a traditional bank loan; you are borrowing against your own asset, and the process is quick and requires no credit check. You can use these funds for anything you want—a down payment on a property, a business investment, or a major life expense. It's important to understand that any outstanding loan balance will reduce your death benefit if you pass away before it's repaid. However, when managed correctly, policy loans provide an incredible source of liquidity and financial control, allowing you to put your money to work in two places at once.
Whole life insurance is one of the most misunderstood financial tools out there. A lot of the advice you hear is based on outdated information or a fundamental misunderstanding of how these policies actually work. When you see it as more than just an insurance product—when you see it as a financial asset—its value becomes much clearer. Let's clear up some of the biggest myths so you can make an informed decision about your own financial strategy.
I get it—when you compare the monthly premium of a whole life policy to a term policy, the difference can be jarring. But comparing them this way is like comparing the cost of renting an apartment to buying a house. With term insurance, you're renting your coverage. With whole life, you're building equity. A portion of every premium you pay goes into your policy's cash value, an asset you own and control. The true cost isn't just the premium; it's the premium minus the cash value you're building. Over time, a properly structured policy can become an incredibly efficient way to build wealth.
This is one of the most persistent and incorrect myths. The cash value component is specifically designed for you to use during your lifetime—it's one of the core benefits. You can access this capital by taking out a policy loan against it. The process is simple, requires no credit check, and the funds can be used for anything, from investing in your business to covering an emergency expense. This liquidity makes your policy a powerful financial tool, giving you access to capital without having to sell off other investments. It’s a core component of what we call The And Asset®, because it works alongside your other assets.
People often get stuck on the "buy term and invest the difference" argument. This assumes your choice is either whole life or traditional investments. We see it differently. Whole life insurance isn't meant to replace your stock portfolio; it's meant to complement it. The cash value grows at a predictable rate, completely insulated from market volatility. This provides a stable foundation for your entire financial picture. It’s not about getting the highest possible return; it’s about creating security, liquidity, and tax advantages that your other investments simply can't offer. It’s a strategy for protecting and growing your wealth with less risk.
While it's true that whole life policies are built on a foundation of consistent premiums, that consistency creates predictability, not rigidity. True flexibility comes from how you can use the policy. You can add riders, like a paid-up additions rider, which allows you to contribute extra funds to accelerate your cash value growth when you have a surplus. The ability to take policy loans whenever you need them provides another layer of incredible flexibility. This structure gives you control and options, allowing you to adapt to life's opportunities and challenges without derailing your long-term financial plan.
Whole life insurance is a powerful financial tool, but it’s not the right fit for everyone. Just like you wouldn't use a hammer to turn a screw, you need to make sure this tool aligns with your specific financial blueprint. Being intentional with your wealth means looking at any strategy from all angles—the good, the bad, and the "it depends." Before you commit, it's essential to understand the potential trade-offs that come with a level premium whole life policy.
Think of it as a long-term financial partnership. It requires a consistent commitment, offers a specific type of growth, and has its own set of rules. For many entrepreneurs and families, the stability and lifelong security are exactly what they need to build a solid foundation. For others, the structure might feel restrictive. We're going to walk through the four main considerations you should have on your radar: the premium costs, the flexibility of the policy, the implications of an early exit, and what economists call "opportunity cost." Understanding these points will help you decide if this strategy truly serves your vision for an intentional life.
Let's be direct: the premiums for a whole life policy are significantly higher than for a term life policy. This is the first thing most people notice, and it's a crucial point to understand. With term insurance, you're essentially renting coverage for a specific period. With whole life, you're buying a permanent asset. A portion of every premium you pay goes toward building your policy's cash value, which is a living benefit you can use. This is why it costs more—you're funding both a death benefit and a personal savings component. This higher cost requires a stable, long-term financial commitment, so you need to be confident you can comfortably handle the payments for decades to come.
Whole life insurance is designed for stability, not for high-risk, high-reward speculation. The insurance company manages the investments backing your policy's cash value growth, aiming for steady, predictable returns. This is a feature, not a bug, for those who want to reduce risk in their financial plan. However, this also means you don't get to direct how your cash value is invested, unlike with a 401(k) or brokerage account. If you're a hands-on investor who enjoys actively managing your portfolio and chasing market trends, the built-in structure of a whole life policy might feel restrictive. It’s a trade-off between control and consistency.
A whole life policy is a marathon, not a sprint. It's designed to be held for your entire life. If you decide to cancel the policy, especially in the early years, you'll likely face surrender charges and may get back less than you paid in. The cash value needs time to grow and compound before it can become a substantial asset. Think of it like planting a tree; you can't expect to harvest fruit in the first season. This long-term commitment is why it's so important to ensure the premium payments fit comfortably within your financial plan from the very beginning. This isn't a liquid savings account you can dip into without consequence next year.
Whenever you put a dollar somewhere, you're choosing not to put it somewhere else. This is called opportunity cost. Some financial commentators argue for a "buy term and invest the difference" strategy, suggesting you could get higher returns by investing the money you'd save on premiums in the stock market. While it's true that other investments offer the potential for higher returns, they also come with higher risk and no certainties. The real question is what you want your money to do. Whole life offers a unique combination of benefits—a death benefit, tax-advantaged growth, and access to capital—that you can't replicate with a single market investment. It's about finding the right balance for your overall wealth strategy.
Picking a whole life insurance policy is a major financial decision, one that will be part of your life for decades. It’s not about finding just any policy; it’s about finding the right one that fits seamlessly into your financial picture. Before you sign on the dotted line, walk through this checklist to make sure you’re making a choice that serves your long-term vision.
Let’s be direct: whole life premiums are a more significant commitment than term life premiums, especially at the start. But a simple price comparison doesn’t tell the whole story. You need to consider the value you’re building. Think of it as a net cost—the total premiums you pay minus the growing cash value you can access later. Before committing, take a hard look at your finances to ensure you can comfortably handle the fixed payments for the long haul. This isn't just an expense; it's a strategic part of your overall financial plan that requires consistent funding to work effectively.
A life insurance policy is a long-term promise from the insurer to you. You need to be confident that the company will be around to fulfill that promise, whether that’s 10, 30, or 50 years from now. This is where you do your homework. Look into the company’s financial strength ratings from independent agencies like A.M. Best, Moody’s, and Standard & Poor’s. These ratings are like a report card on the company's ability to meet its obligations. A strong, stable company is non-negotiable, as the policy is only as reliable as the institution that backs it.
If you’re considering a policy from a mutual insurance company, you’ll want to look at its dividend history. Participating whole life policies are eligible to receive annual dividends when the company performs well. While dividends are not a certainty, a company's track record of paying them, especially through various economic recessions and booms, is a powerful indicator of its stability and prudent management. This history gives you insight into the policy's potential for growth, which is a key component of building wealth through an instrument like The And Asset®.
A whole life policy shouldn't exist in a vacuum. It needs to have a specific job within your larger financial strategy. Are you using it to create a tax-advantaged asset for retirement, fund future business ventures, or ensure a smooth transfer of wealth to the next generation? The fixed premium can be a huge advantage for planning, as you know exactly what your commitment is year after year. This predictability allows you to build a solid foundation for your long-term goals, like securing a comfortable retirement. Make sure the policy is structured to meet your specific objectives from day one.
Whole life insurance isn't the right fit for everyone, and that’s okay. It’s a powerful financial tool designed for people with specific, long-term goals. Think of it less as a simple safety net and more as a multipurpose asset that works for you throughout your entire life. It’s for the person who wants to do more than just leave money behind—they want to build a lasting financial foundation that offers stability, growth, and flexibility.
This type of policy is particularly well-suited for individuals who have already established a solid financial base, like consistent savings and other investments, and are now looking for a secure, tax-advantaged way to grow and protect their wealth for generations. It’s a strategic move for those who value certainty and want to create a legacy that extends far beyond their own lifetime. If you see life insurance as a cornerstone of a larger financial plan, you’re in the right place. We’ll explore a few key groups who can get the most out of a whole life policy.
If you’ve built significant wealth, your focus naturally shifts to protecting it and passing it on efficiently. Whole life insurance is a cornerstone of sophisticated estate planning for this exact reason. The death benefit is paid to your beneficiaries income-tax-free, making it an incredibly effective way to transfer wealth to the next generation. This payout can provide immediate liquidity your family can use to cover estate taxes and other settlement costs without being forced to sell off cherished assets, like a family business or real estate portfolio. It’s a valuable asset that helps protect your family and build wealth over your lifetime.
As a business owner, you’ve poured everything into building your company. A whole life policy helps make sure that legacy continues, even after you’re gone. It provides coverage throughout your entire life, making it a suitable option for funding a buy-sell agreement. This ensures your partners have the capital to buy out your share of the business, allowing for a smooth transition for your family and the company. It can also function as key person insurance, providing the business with funds to manage the loss of an essential leader. This isn't just an expense; it's an asset on the balance sheet that grows over time, embodying the principles of The And Asset®.
For families looking for more than just income replacement, whole life insurance offers a unique combination of protection and opportunity. A policy not only helps your family financially after you pass away but also builds cash value over time that you can use while you're alive. This accessible cash value can become your private family fund, ready to be borrowed against for major life events—like a down payment on a home, college tuition, or even supplementing your retirement income. It provides a financial backstop that gives you options and peace of mind, knowing your family is secure no matter what the future holds. You can see how others have used it in our life insurance stories.
While whole life offers lifelong benefits, it’s not the only tool in the shed. Sometimes, a more straightforward, temporary solution is the better choice. Term life insurance is generally less expensive and is designed to cover specific needs for a fixed period. Think of it as a solution for the "what ifs" during a particular chapter of your life. For example, it’s a great fit for covering a 30-year mortgage or ensuring your kids have financial support until they’re grown and independent. If your primary goal is maximum coverage for the lowest cost to handle temporary responsibilities, term life insurance might be the more practical option.
Choosing a whole life insurance provider is a long-term commitment. The company you pick will be your financial partner for decades, so it’s critical to find the right fit. While most providers offer policies with the same core components—a death benefit, cash value, and level premiums—they are not all created equal. The real differences lie in the company’s financial strength, its history of paying dividends (if it’s a mutual company), and the flexibility of its policy design.
Think of it like buying a car. A Honda and a BMW will both get you from point A to point B, but the engineering, performance, and experience are vastly different. The same is true for life insurance carriers. Some are structured to deliver steady, reliable performance, while others might offer different features or riders. Your job is to look under the hood and see which engine aligns with your personal financial plan. Below, we’ll look at a few of the major players in the industry and compare them to our unique approach. This isn’t an exhaustive list, but it’s a great place to start your research.
At BetterWealth, we see whole life insurance differently. We don’t view it as just a death benefit product. Instead, we help you structure it as what we call The And Asset®—a powerful financial tool you can use throughout your life. The goal is to design a policy for maximum cash value growth, which you can then access for opportunities like investing in real estate, funding your business, or supplementing retirement income, all while maintaining your life insurance protection.
This strategy involves over-funding the policy, putting in more than the minimum premium required. This accelerates the growth of your cash value, turning your policy into a personal source of financing. It’s a proactive approach designed for entrepreneurs and investors who want their money working for them in more ways than one.
Guardian is one of the largest and most respected mutual insurance companies in the country. As a mutual company, it’s owned by its policyholders, not stockholders. This structure means that when the company performs well, profits can be returned to policyholders in the form of annual dividends. While not a certainty, Guardian has a long track record of paying them.
Their whole life insurance products are known for their strong performance and solid contractual components. They emphasize the core benefits: lifelong coverage for your family, the accumulation of cash value, and premiums that will never increase. For many, Guardian is a top-tier choice for building a foundational permanent life insurance policy.
Northwestern Mutual is another industry giant with a reputation built on financial strength and stability. Like Guardian, it is a mutual company owned by its policyholders, and it has an exceptional history of paying dividends year after year. Many people are drawn to Northwestern Mutual for its consistent performance and the high ratings it receives from independent financial rating agencies.
Their approach to whole life insurance centers on providing a death benefit alongside the steady accumulation of cash value. The company operates through a large network of financial advisors who sell their products exclusively. This can be a benefit if you’re looking for a guided experience, but it’s something to be aware of as you explore your options.
You probably know State Farm for its home and auto insurance, but it’s also a major provider of life insurance. As a mutual company, it shares its success with policyholders and is known for its financial stability and widespread brand recognition. Many people choose State Farm because they already have a relationship with a local agent and appreciate the convenience of bundling their policies.
State Farm’s whole life insurance is often presented in straightforward terms: it protects your family when you’re gone and builds cash value you can use while you’re alive. While their policies are solid, they are often designed with a primary focus on the death benefit rather than for high cash value accumulation, which is a key distinction from the And Asset strategy.
Why is whole life insurance so much more expensive than term insurance? It's helpful to think of it less as an expense and more as funding an asset. With term insurance, you're essentially renting your death benefit for a set period. If you outlive the term, the money you paid is gone. With whole life, you're building equity in a financial asset you own. A significant portion of your premium payment goes into your cash value, which grows over time and is accessible to you. You're paying for both lifelong protection and a personal capital reserve.
How soon can I actually use the cash value in my policy? A whole life policy is a long-term financial tool, and the cash value growth is slower in the first few years. However, a policy designed as The And Asset® is structured to maximize cash value growth from the start. While you won't have a large sum available in year one, the goal is to make the cash value accessible much sooner than a standard policy might allow. The exact timeline depends on your policy's specific design and how much you contribute.
Isn't it better to just "buy term and invest the difference"? This popular saying presents a false choice, suggesting you must pick one strategy or the other. We see whole life insurance as a complementary piece of your financial plan, not a replacement for your other investments. The cash value in your policy grows in a stable, predictable way, completely separate from stock market volatility. It provides a secure foundation and a source of liquid capital that your other, higher-risk investments simply can't offer. It's about having an "and" strategy, not an "or" strategy.
What happens if I have a tough year and can't make a premium payment? This is a valid concern, especially for business owners with variable income. Most policies have a feature called an Automatic Premium Loan. If you miss a payment, the insurance company can automatically use your policy's existing cash value to cover the premium for you. This keeps your policy active and your death benefit in place without you having to do anything. It’s a built-in safety net that adds another layer of security to your financial plan.
If I take a loan against my policy, does my cash value stop growing? This is one of the most powerful and misunderstood features. When you take a policy loan, you aren't actually withdrawing money from your cash value. You are taking a loan from the insurance company and simply using your cash value as collateral. Because of this, your full cash value can remain in your policy and continue to grow and earn potential dividends. This allows you to put your money to work in two places at once—funding an opportunity with the loan while your policy's value continues to compound.
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