Cash Value Life Insurance
There are many myths about cash value life insurance, and one of the biggest is that if policyholders make their premium payments faithfully and on time, a policy is good forever.
However, not all cash value life insurance products offer the same benefits. Universal Life, Variable Life and other policies that include stock-market-reactive components create a real risk. You may need to up the policy’s premiums if the markets are volatile and you lose money. If you leave the markets unmonitored, or if your life insurance policy is tied to the markets, then you may find a zero cash value policy terminated by the insurer and yourself without life insurance.
Furthermore, a cash value policy, if tied to the stock market, should be reviewed regularly because of its variable nature. It is wise to review your policies if your life goals change.
If you carry a cash value life insurance policy, you need to understand what your statements mean. If your most recent statement indicates that you need to pay more than you have been paying, the cash value of the policy is running very low. You will need to pay more to keep the policy in force. If and when you receive a statement that shows that your cash value is declining, you need to take action immediately. Typically, there is very little time to respond; without action, your policy may be terminated or you may see reduced insurance coverage.
Most policyholders believe that, in such a situation, their only choice is to pay a larger premium. That is not the case. There may be other options.
A competent, experienced life insurance agent may be able to offer you several ways to address your specific dilemma. Again, not all cash value life insurance policies are the same. Get your policy reviewed by an agent and discover what you can do to take action.
In order to have the kind of coverage you want and need, you must keep your cash value life insurance in force by paying the premiums and monitoring the stock market. Do not let your life insurance policy expire before you do. Someday, it will provide financial support for your family when you are gone.