Life insurance companies sell insurance policies that also act as a savings account. A person typically buys life insurance to provide financial protection for family members in the event of death. Many types of life insurance, however, include a savings provision. An insurance company sets aside part of each premium (insurance payment) paid after a policy has been in force for a certain period. This amount, called the cash value of the policy, accumulates and earns a specified rate of interest. In this way, it resembles a savings account.
The cash value of an insurance policy may be particularly useful in an emergency involving an unplanned expense. Policyholders can terminate their life insurance for the cash value or keep the policy and borrow against its cash value.
Life Insurance Policies
Category: Life Insurance