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Tax-Smart Savings: How Cash Value Life Insurance Can Boost Your Financial Plan


Cash value life insurance is a type of life insurance that not only provides financial protection for your loved ones in the event of your death, but also allows you to build cash value over time. This cash value can be used as a tax-smart component of your overall savings plan.


There are two main types of cash value life insurance: whole life insurance and universal life insurance.

  1. Whole life insurance: Also known as traditional life insurance, whole life insurance offers a fixed premium, fixed death benefit, and a savings component that grows on a tax-deferred basis. The cash value component of a whole life policy grows at a guaranteed rate, which is set by the insurance company. The policyholder can borrow against the cash value or withdraw funds from the policy, but doing so will decrease the death benefit and cash value of the policy.

  2. Universal life insurance: Universal life insurance also offers a death benefit and a savings component, but it is more flexible than whole life insurance. The policyholder can choose from a variety of premium and death benefit options, and the cash value component of the policy can grow at a fixed, indexed or a variable rate that is tied to market performance. Universal life insurance policies typically have a lower guaranteed rate of return than whole life policies, but the indexed or variable policies in particular can potentially offer higher potential returns, if the market performs well.

One of the benefits of cash value life insurance is that the cash value grows on a tax-deferred basis. This means that the money in the policy grows without being subject to current income taxes. Additionally, when the cash value is withdrawn or used to pay premiums, it is not subject to income taxes as long as certain guidelines are met. This makes it a great option for building savings over time, as the money can grow without being reduced by taxes.

Another benefit of cash value life insurance is that it can be used as a source of funds for various financial goals. For example, you can use the cash value to pay for your child's college education, supplement your retirement income, or even help purchase a home. If a policyholder borrows against the cash value or withdraws funds from the policy, this will decrease the death benefit and cash value of the policy until the borrowed amount is repaid.

It's also important to note that cash value life insurance also provides death benefit protection for your loved ones. In the event of your death, your beneficiaries will receive the death benefit, which can help provide financial security for them during a difficult time.

To utilize cash value life insurance as a tax-smart component of your savings plan, consider working with a financial advisor to determine the best type of policy and premium amount that fits your needs. They can also help you determine the right balance between the death benefit and cash value that meets your overall financial goals.

Overall, cash value life insurance can be a valuable addition to your overall savings plan.

By providing tax-deferred growth, it can help you build savings over time while also providing death benefit protection for your loved ones.

It's important to work with a financial advisor to understand how it fits into your overall financial plan. Feel welcome to contacts us via the button below to get started with your Tax Smart Planning.


Like many businesses today, the financial services business is rapidly evolving. So, let us share with you how we are evolving as well.

We provide holistic planning, with a goals based approach, however the challenge today we find is that many of our clients don't have time or interest in reading a 60-page analysis of their financial condition. Nor are they served by taking months to take action to work on their financial goals, and to protect their families.

We have a need to communicate more effectively with you than ever before, that means ideally our analysis should be: One page=One idea: in an attempt to get to the bottom-line more efficiently and effectively than ever.

In order to do this, we have invested in a process called Asset-Map. Feel welcome to click on the image, or button below to explore and start your discovery process, and to get your Asset Map® Report, a visual snapshot of all of the financial elements of your household.

Then we can engage in the process of helping you map your progress towards achieving your financial goals, and living your Life Capitalized™.

Tap on the button below to get started.


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