USES FOR CASH VALUE LIFE INSURANCE

The most important use of life insurance is to replace the income lost in the event of your death. It can help pay your family's immediate and ongoing debts. The cash value of your policy can be used for almost any financial need you can think of. Here is a list of some of the most common uses of cash value life insurance:

Education funding. Use the money you have saved in your policy to pay for your children's educations.  Retirement funding. You can use the cash value of your policy at retirement to supplement your other retirement funds. You can even use it to purchase an annuity that can give you a source of monthly income for the rest of your life.

Business owners can also use cash value policies for services such as the following:

A deferred compensation program. The equivalent of the deferred compensation is used to pay the premium, and the cash value is used to pay the future benefits of deferred compensation. This type of plan also provides a death benefit should an employee die prematurely.  Salary continuation. This creates employee incentives by offering extra retirement and death benefits.  Split-dollar arrangements. The employer owns the policy and pays the premiums, but the employee names the beneficiary (the person receiving the benefits). When the employee dies, the employer gets funds equal to the cash value of the policy with the rest going to the beneficiary.

You can cancel your policy and "surrender" it back to your insurance company to receive your cash value in a lump sum of money. You can surrender the entire policy or just part of it. You may have to pay a surrender charge depending on the maturity of the policy. You will also have to pay taxes on the interest you made on the cash value.

Now that you understand some of your options for using the cash value of your policy, let's look at how you can actually get some of that money.