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Whole Life Insurance Policy Cash Value Calculator

Increase Your Death Benefit

How to Maximize Cash Value in Whole Life Insurance

If you have a shared whole life insurance policy from a mutual company, consider this: You can use any dividends you earn to buy paid-up additions.

Paid-up additions are a single, lump-sum payment you make to your life insurance policy to increase its cash value and death benefit.

Finally, purchasing paid-up additions does not require any medical assessments or underwriting criteria, so your coverage can be expanded even if your health deteriorates.

How Is The Cash Value Of Life Insurance Calculated

Unfortunately, there isnt a simple answer for how to calculate the cash value of a life insurance policy. This is due to the way that cash value is accumulated for different types of policies. In many cases, the sum of premiums paid, the duration the policy has been in effect, and the value of your death benefit define the cash surrender value of a life insurance policy. Your life insurance company may have a cash value life insurance calculator to help you determine how much it is worth.

For example, if youre wondering, What is the cash value of a whole life insurance policy? The best way to calculate a life insurance payout is to consult your insurance company. This is because whole life insurance policies have guaranteed cash value accounts that will grow based on the insurance companys formula. But, more specifically, you might be asking, How do I find the cash value of my life insurance policy? Most insurance companies will have a chart similar to this one:

Policy Year

These charts will clearly show you how much cash value your whole life insurance has accrued.

If you want a growth in cash value, its also possible to receive dividends based on how much money you have. If an insurance company generates more revenue than it needs to operate, they will pay policyholders. However, dividends are not guaranteed and should not be relied upon.

Cash Surrender Value Explained

A major part of a whole life insurance policy is the cash value. This is separate from the value of the death benefit, and it encompasses different aspects such as the premiums paid, the interest earned, and any dividend cash values.

The cash surrender value is the amount that would be paid out if the policy were terminated by the owner. In short, this is the net value of any cash assets of the policy with the appropriate amounts deducted.

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Term Life Insurance Vs Whole Life

A term life policy is a temporary plan that lasts a specific period.

Quite the opposite, whole life lasts forever.

Term coverage can last for a certain number of years, such as:

  • 10-year term policy
  • 20-year term policy
  • 30-year term policy

Or it can last until a certain age, such as 65 or 80. Once you reach the term length, the policy terminates, and you no longer have coverage.

Now, one type of policy is not better than the other.

Some insurance agents like Dave Ramsey will disagree and take a stand that one is better than the other.

The key is to select the correct type of policy that is best suited to accomplish your goal.

Heres a simple rule to follow to decide which type of policy is best for you:

  • Term: Best to solve a temporary problem such as income replacement or paying off a debt such as a mortgage.
  • Whole: Best to solve permanent issues such as estate planning or funeral expenses.

In short, buy term for a temporary need and buy whole life for a permanent condition.

Dont be lured solely by the cheaper term life insurance rates. Consider all the variables when deciding.

What Can You Do With Policy Dividends

Whole Life Insurance Calculator Cash Value

You can do four things with the dividends paid to you from your participating whole life insurance policy:

  • You can receive a check for the dividend amount
  • You can use them to reduce your future premiums
  • You can leave it on deposit with the insurance company. This means that it will stay in your cash value account and will continue to grow tax-deferred within your cash value account
  • Finally, you can use your dividends to buy additional life insurance .
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    How Is Cash Value In Whole Life Policy Different From Cash Value In Indexed Or Variable Universal Life Policy

    How cash value account is built up is the unique differentiator of a whole life policy vs. indexed or variable universal life insurance policy. It is also one of the main reasons why whole life policy is much more expensive than IUL or VUL for similar benefit.

    Only whole life policy offers both guaranteed cash value. A portion of premium of a whole life policy is allocated to cash value account and it will increase by a fixed rate, usually at 2%. This provides a guaranteed cash value amount of the policy. Both indexed and variable universal policy do not offer guaranteed cash value.

    In addition to that, whole life policy also offers non-guaranteed cash value amount. It is non-guaranteed because it comes from the dividend that gets paid to the policies. Since dividends are non-guaranteed, this portion is also non-guaranteed. Similar to this, the cash value in indexed and variable universal life insurance is also non-guaranteed because it depends on the performance of the indexes and the investment in the sub-accounts of the policy.

    > > MORE: Is Whole Life Insurance Worth It? A Case Study

    In general, indexes and investments in sub-accounts perform much better than dividend payouts. Thats the reason why non-guaranteed cash value account in indexed and variable policies is always more than that in whole life policy. If you want to maximize the cash value account of a permanent policy, you should definitely consider either indexed or variable universal policies.

    Accumulation Slows Over Time

    When you have cash-value life insurance, you generally pay a level premium. In the early years of the policy, a higher percentage of your premium goes toward the cash value. Over time, the amount allotted to cash value decreases. Its similar to how a home mortgage works: In the early years, you pay mostly interest while in the later years most of your mortgage payment goes toward principal.

    Each year as you grow older, the cost of insuring your life gets more expensive for the life insurance company. This is why the older you are, the more it costs to purchase a term life policy. When it comes to cash-value insurance, the insurance company factors in these increasing costs.

    In the early years of your policy, a larger portion of your premium is invested and allocated to the cash value account. Generally, this cash value can grow quickly in the early years of the policy. Then in later years, the cash value accumulation slows as you grow older and more of the premium is applied to the cost of insurance.

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    Types Of Cash Value Life Insurance Policies

    Permanent life insurance policies typically last for your entire life as long as you keep paying the premiums. There are several types of policies that offer permanent coverage, but some of the most common ones are:

  • Whole Life Insurance: Your cash value grows at a fixed rate set by the insurer and is therefore called guaranteed cash value. When the policy matures, the cash value must equal the face amount. Most whole life policies mature at age 121
  • Universal Life Insurance: The value of your cash grows over time as it earns interest, and the insurers performance affects how much growth you see.
  • Indexed Universal Life Insurance: Your cash value grows based on an indexs performance, such as the Dow Jones Industrial Average.
  • Variable Life Insurance: Your cash savings can be invested in various public securities the insurer offers. This is similar to investing in mutual funds.
  • Should I Buy Whole Life Insurance For My Child

    How To Use Cash Value Of Whole Life Insurance

    Now that you know the benefits of a whole life insurance policy for children cash value, future insurability, lock in lower premium, etc. its up to you to decide the value in how it will benefit your child. Purchasing a whole life insurance policy for your child can be a great gift to them and their future for its sound financial protection and cash value growth.

    Ready to take the next step in planning for your childs financial future? Contact your American Family Insurance agent today theyll answer your questions and help you find the right policy for you and your child.

    1 The 10-year payment option for the DreamSecure Childrens Whole Life Policy is a modified endowment contract. This means that pre-death distributions will generate taxable income to the extent there is taxable gain on the policy. A 10% federal tax penalty applies to the taxable amount of a distribution received before the policyholder reaches age 59-1/2. Neither American Family Life Insurance Company nor its agents are authorized to give tax or legal advice. You should consult a tax advisor for any questions you have regarding a modified endowment contract.

    2 Childrens Whole Life Insurance policies mature at age 121. If alive at age 121, the policyowner will receive the surrender value of the policy in force at that time.

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    Whole Life Insurance Policy Cash Value Calculator References

    Whole Life Insurance Policy Cash Value Calculator References. A life settlement is the sale of an existing life insurance policy for more than the policys cash surrender value, but less than the death benefit amount. Many policies offer living benefits.

    Cash value life insurance policies provide both a death benefit and cash value accumulation during the policy owners lifetime. To calculate the cash surrender value of a life insurance policy, add up the total payments made to the insurance policy. Cash value is the part of your insurance policy that earns interest and can be available to you for withdrawal or borrowed against in case of an.


    Because the policy offers a $1 million death benefit and you. After your insurance company deducts a 20%.


    You make the decision to cash in your policy. Some insurers charge a surrender fee if.


    Help protect the things you value, and help meet your financial goals. A cash surrender value is the total payout an insurance company will pay to a policy holder or an annuity contract owner for the sale of a life insurance policy.


    The cash value of whole life insurance is the basis by which the insurance company will loan to the policy owner. Whole life policies are very.


    Cash Value In Whole Life Insurance Policies

    The crucial concept for whole life policies is that with whole life insurance policies, the life insurer manages your cash value such that it is equal to the policys face amount by the time it matures.

    Most insurance companies permanent life insurance products mature at age 121. However, a small group of life insurance companies, such as Mutual of Omaha, still have their policies mature at age 100.

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    Can You Avoid Surrender Charges On Whole Life Cash Value

    The surrender charge that leads to a lower surrender cash value tends to be higher earlier on in the policy. It takes about ten years for the price to drop, and it can even disappear after this period.

    The easiest way to avoid the surrender charge is to make sure you understand its terms in your contract. Make sure you verify the existence of a surrender charge and double-check the amount or how it is calculated.

    Most surrender charges drop off, so finding a way to stretch to the drop-off point may save you more money in the long run.

    Taking Action To Keep The Policy Active

    Cash value life insurance calculator

    If you can adjust your premium then you should be able to find a position where it is easy to keep your policy active.

    If not, check to see if the policy will automatically borrow from the cash value. If this is not the case, you may need to dictate that this scenario is allowed, or you may need to take a loan out and manually use the value to cover premium costs.

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    Is Whole Life Insurance Worth It

    The short answer is no. Whole life insurance is not worth it. It is too expensive and there are better alternatives you can choose from. People usually buy whole life insurance for two main purposes:

    • to leave a large amount of money, tax-free, to their heirs when they pass away. This is especially popular if you have a child with special needs or a part of estate planning.
    • to supplement their retirement income, if they need, by withdrawing or borrowing from the cash value account of the whole life policy when they get older.

    For either purpose, you can choose a much better alternative. If you want to leave a large amount of money to your family when you pass away, guaranteed universal life insurance is a much better option. It provides permanent coverage at a much cheaper price, usually less than half the premiums of whole life insurance.

    If you want to have an option to withdraw from a life insurance policy to supplement your retirement income, either indexed universal life insurance or variable universal life insurance is a better option. The cash value account in either IUL or VUL will very likely grow much faster thanks to its pegging against the popular indexes like S& P 500 and being protected in a downturn market. The insurance cost in an IUL or VUL policy is also cheaper than that in a whole life policy, which leaves more money in the cash value account.

    > > MORE: Why is Indexed Universal Life Insurance a Good Idea for Retirement Savings?

    Term Vs Whole Life Insurance Calculator

    When analyzing term vs whole life insurance, youll want to look at several different factors.

    Well cover how to calculate the differences between term and whole life insurance and help you decide which option is best for your needs.

    Enter your ZIP code below to view companies that have cheap insurance rates.

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    How Many Years Do You Pay For Whole Life Insurance

    You can pay for whole life insurance from now until you die and then the death benefit for your policy will be paid out to your beneficiary. Or you could purchase a 10-pay policy and have a permanent death benefit that you pay for in 10 years. Obviously, if you choose the 10-pay option, your annual premium will be a lot more than if you pay from now until you die.

    But remember whole life is an extremely versatile product that allows you to pay premiums in different ways. For example, you could use policy to dividends to offset the annual premium. Your dividend may be enough to cover the entire annual premium or it may only partially pay your premium, that will depend on how long you’ve had the policy and the amount of your whole life policy dividend.

    The right answer for how many years you pay for your whole life is to know how long you want to pay before you start. In helping hundreds of clients design and set up their own whole life policies over three decades, the clients who are the most pleased knew exactly how long they were going to fund the policy before they started. And they followed through on that plan to fund it.

    Why does that make a difference? The major reason is that it allows us to design the policy for maximum efficiencyto find the perfect balance between the premium amount, the death benefit they need, and the cash value accumulation they want. Your goal should be to strike the balance there as best as you can for yourself.

    Helps Advisors And Agents Like You Establish Yourself As Your Clients Most Trusted Financial Expert By Helping Them Understand The Value Of Products Like Whole Life Insurance

    Drawbacks to Whole Life Insurance: Cash Value | IBC Global, Inc

    We have helped thousands of advisors and agents differentiate themselves in a crowded industry and take their business to a whole new level.

    Truth Concepts isnt just a software company through the Truth Concepts 360° platform we provide both live and online training to help you master your understanding of our calculator software, including our whole life insurance calculators. You will grow your confidence while earning your clients trust which will grow your business.

    No credit card needed!

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    What Is The Cash Value Of A $10000 Life Insurance Policy

    So, the face value of a $10,000 policy is $10,000. This is usually the same amount as the death benefit. Cash Value: For most whole life insurance policies, when you pay your premiums some of that money goes into an investment account. The money in this account is the cash value of that life insurance policy.

    How To Use Cash Value Of Whole Life Insurance

    Because cash value life insurance premiums can be pricey, you need to know how to access the money in your policy.

    There are different ways to use the money you get from your life insurance policy. You can choose to cash it out, take out a loan, or do something else with it.

    If you dont want your policy anymore, do not let it lapse. If it lapses, you will lose your death benefit and any cash value you could have received.

    Some things you can do with your cash value:

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    Other Factors That Influence Life Insurance Premiums

    Our whole life insurance premium calculator doesnt account for your personal health history. Your medical history and other risk factors, like smoking, have a major impact on how much you pay for a policy and each insurance company weighs health factors differently.

    That means two people with the same age, gender, and ZIP code would get the same estimates from our cost calculator, but receive different final premiums after going through the life insurance application process.

    Shopping around and comparing rates from different insurance companies is the best way to ensure youre not overpaying for a policy.


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