How to Use Cash Value as a Financial Tool

Once you’ve built cash value in a permanent life insurance policy, you can use it strategically:

• Policy Loans: You can borrow against your cash value at a lower interest rate than most traditional loans, with no credit check. However, if you don’t repay the loan, it reduces the death benefit.
• Partial Withdrawals: You can withdraw a portion of the cash value (usually tax-free), but it reduces the death benefit.
• Paid-Up Insurance: After significant cash value accumulation, you may use it to buy “paid-up” insurance, reducing or eliminating future premium payments.
• Collateral for Loans: Some banks allow you to use cash value as collateral for loans, helping you access funds without directly withdrawing from the policy.