Certain permanent life insurance policies accumulate cash value over time. This cash value, representing a portion of the premiums paid beyond the cost of insurance, can be accessed by the policyholder. A common example is using this accumulated cash value as collateral for a loan issued by the insurance company itself.
The ability to access the cash value offers significant financial flexibility. It provides a readily available source of funds for various needs, such as covering unexpected expenses, funding education, or supplementing retirement income. Historically, this feature made permanent life insurance attractive, offering both death benefit protection and a savings component that could be utilized during the policyholder’s lifetime.
