Cash Back or Money Back Life Insurance

Cash Back or Money Back Life Insurance

A very standard question from purchasers of life insurance is, ” I have paid into the policy for these many years…What will I get back in case I am still alive and healthy? “   A very pertinent question because we all want to know where our money is going and will there be any return on our money during our life time.

Obviously, a term life insurance policy does not have a cash back component as it offers only insurance and you pay premiums (cost of insurance) that remain level for the duration of the term.

It is Permanent Life Insurance which could build, potentially, a cash value that could be referred as Cash Back! In Permanent Life Insurance types, T-100 is not generally known for providing cash values. It is Whole Life and Universal Life Insurance that could create cash values.

Whole Life insurance policies have a built-in cash value, in the case of Participating Whole Life policies, the cash value includes a guaranteed cash value and a dividend cash value. The dividend cash value is dependent on the performance of the insurance company itself.

Universal Life insurance policies offer an unbundled and a flexible form of cash value life insurance. The insured Pays the cost of insurance, premium tax, administration fees and policy fees. Overfunding the policy creates a tax sheltered growth oriented cash value.

The investment choices include low-risk investments, such as GICs or bond funds, or higher risk investments, such as equity or specialty funds. Some  major companies, such as BMO  Insurance,  Industrial Alliance etc. have a large number different investments to choose from on their Universal Life plan.

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