For the most of us, life insurance cash in value plans are the best type of policies to take out, they are so flexible that it would actually be financially beneficial for you to take this type of plan out rather than any other type, let us explain what a cash in value life insurance policy can do for you to make life easier for you, in essence they are a life insurance plus investment/savings account stuck together.
What exactly is Life insurance with cash in value? Well, there are 3 types of cash in value life insurance plans, these are, Whole life, Universal life and Variable life each type of policy benefits different type of people depending what you are wanting out of your cover.
Whole Life cash in value insurance
Whole life insurance plans means that you are paid the entirety lump sum that you have paid into your policy for as long as you’ve paid in the longer you have been paying into the plan the bigger your pay-out will be in addition, any bonuses that your life insurers may provide, this policy is a very long term investment, the actual policy does not run out and you don’t have to renew it, when you take out a Whole Life policy, you simply pay the premium amount each month until the day you die, this type of cash in value life insurance is by far, the best investment long term and is completely tax free so your family or next of kin does not have to pay inheritance taxes (IHT) on the pay-out lump sum, in order to obtain this payment as tax free, you will need to phone up your life insurance provider and set your preferred “in Trust” or in other words, you simply need to nominate a loved one or your next of kin to receive your life insurance pay-out, once you have done this, the person you have nominated as your trust, will receive your entire pay-out tax free, because this is tax free, this can be a good way of helping your family you leave behind to pay for the inheritance tax that is due (HIT).
Inheritance tax is set at 40% on all assets worth £325,000 or over, so if you think about it, if your family members or loved ones inherit your belongings when you die, they will need to stomp up the cash to pay for the inheritance tax bill and if they can’t do this, they will need to perhaps sell your belongings that you have worked hard for to share with them, just so they can afford to pay the tax due, this is where the inheritance tax exempt benefit works its’ magic, the sum you leave behind for your family with a type of life insurance cash in value policy can then be used to help your family pay for the inheritance tax that is due among other things, then your family can keep everything you’ve given them and they will not be subjected to have to find additional money just to keep their inheritance which is a great assurance to have.
Universal Cash in value insurance
A universal cash in value life insurance policy is much like the “Whole life” insurance plan but rather being a long term type of plan like the whole life plan, the universal plan is a little more flexible and can accumulate more money in a quicker time period.
With a Universal plan, you get the best of both worlds, it’s a type of savings account as well as providing insurance coverage upon death, each time you make your monthly payment a portion gets added to your life insurance account as cash in value and then the remainder is paid toward the cost of insurance (COI) which is practically like the brokerage fee for your insurance company, they are paid this because they handle your policy, think of a repayment mortgage, when you make a payment, part of the payment goes toward your capital (savings for life insurance) and part goes to the interest for the bank (insurers handling fee).
As you make payments, your cash in value (savings) increase obviously but you also accumulate interest on the cash in value amount, with this, you can if you wanted to, use your cash in value, to pay for your policy premium, therefore the policy is self-maintained, paying itself over time.
A Variable life insurance cash in value plan
This is a life insurance plan made to cater to gamblers, well not so much gamblers in the negative way but it has the potential to stack up on your cash value policy amount at a faster rate than the two previous policies.
When you take up a variable cash in value plan, you are opening sometimes several “sub-accounts” which most of the time you can decide who plays with your cash in value, but some times each insurer works alongside certain investment groups that deal with all of their customers “sub-accounts” associated with their variable life insurance plans but you are able to make your own decision from a panel of investors that your insurers’ work with, a choice is better than nothing at all right? What’s good about this policy especially is you can make withdrawals against your cash in value as a tax free loan to make payments on anything you like, home repairs, pay off debts, holidays, anything you like and sometimes if your cash in value is showing good returns, the money you “borrowed” from your cash in value, can be re-payed by the growth of your plan in time which is very handy.
So as you can see, there are three types of Life insurance with cash in value plans that are quite different in how they work and what you can do in each type of policy, Whole life is treated as a long term, strict type of plan whereas the Universal or even more fruitful Variable cash in value plan can be much more financially beneficial and flexible for you.
We can give you a great Whole, Universal and Variable life insurance with cash in value premium quote simply by filling in an online form which takes literally minutes! So get a quote now.